Pak to furnish electricity tariff details, cross subsidy reduction plan for next FY to IMF

Pakistani industrial consumers paying Rs10 per unit on account of cross subsidy

ISLAMABAD   -   Pakistan will furnish details of electricity tariff, cross subsidy by industrial sector and its reduc­tion plan for the sector during the next financial year (2024-25) to IMF by tomorrow (Friday).

The industrial consumers are currently burdened with addi­tional Rs473 billion annually on account of cross subsidy, which has resulted in the hike of in­dustrial tariff to the unsustain­able level of 14 cents per unit, official source told The Nation. 

Cross subsidy is the prime reason of the highest tariff for the industrial sector in the region, the source said. The industrial consumers in Viet­nam are paying 6 cents, India 8 cents, Bangladesh 10 cents while in Pakistan it ranged from 14 to 16 cents per unit— depends on the exchange rate of Pakistani rupee against the US dollar. The Pakistani indus­trial consumers are paying ap­proximately Rs10 per unit on account of cross subsidy, while domestic consumers using electricity above 400 units are paying additional Rs6 per unit on account of cross subsidy.

The cross subsidy is being used by the government to provide subsidised tariff to life line consumers and the consumers using up to 200 units per month. The govern­ment plans to cut the indus­trial tariff from the existing 14 cents per unit to 9 cents per unit. Competitive tariff for industrial sector is likely to be implemented soon, the source added. However, there is an apprehension that the decision to reduce cross sub­sidy on industrial consumers will further increase the bur­den the electricity consum­ers using 400 and above units per month. The government is also evolving a strategy to pass on minimum burden of the cross subsidy to the con­sumers using 400 and above units, the source maintained.

The source said that IMF sought the details of the cross subsidy. Earlier, a plan in this regard was submitted to IMF, but it didn’t get endorsed by the Fund and now fresh plan will be submitted by Friday in this regard, the source said. On the circular debt, the source said that currently the circu­lar debt stands over Rs2,700 billion, and requiring signifi­cant financing to freeze it at Rs2,310 billion. During the ongoing fiscal year, which was in June 2023, the government will require financing of Rs976 billion. Similarly, the source said that on management con­trol of the Power Distribution Companies (XWDiscos) to be handed over to private sector by end of this year.

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