At a time when all the sectors of the economy, including industry, trade and agriculture, are facing severe problems, the government has decided to withdraw the power subsidies, granted to the export and agriculture sectors.
The Distribution Companies (DISCOs) have been asked to implement immediately the decision to increase tariffs for agriculture tube wells and export-oriented industrial units.
This is in connection with the terms and conditions imposed by the International Monetary Fund for the release of the loan. On February 28, the federal cabinet considered a summary, submitted the power division titled Implementation of Revised Circular Debt Management Plan, and gave the approval of discontinuation of the Zero-Rated Industrial (ZRA) package for the supply of electricity at Rs.19.99 per kilowatt hour (kWh) for export-oriented sectors and Kissan Packages rate relief of Rs.3.60 per kilowatt hour to private agriculture consumers with effect from March 1.
Power Policy and Finance Wings of the Energy Ministrys Power Division wrote letters on February 28 to the Chief Executive Officers of all Distribution Companies, including K-Electric, Registrar NEPRA, and Secretaries of the Ministry of National Food Security and Finance Division.
In the letter, all concerned have been informed about the decision of the federal cabinet regarding the discontinuation of the subsidies and advised to do immediate implementation and take necessary action. At present, the agriculture consumers were being given a subsidy in the form of Rs.3.60 per unit, which will now be at the rate of Rs.16.60 per unit, and the existing rate of electricity for the export-oriented sector was Rs.12.13 per unit, which has been increased to Rs.40 per unit.
The decision of the government to increase the power rates will enable the government to collect Rs.51 billion from the export sector, and an amount of Rs.14 billion will be collected from the farmers till June 2023. As per official sources, the decision to withdraw subsidies has been taken to eliminate the circular debt, as the federal cabinet has already approved the revised debt plan. Under the continuing pressure, the government has already increased the electricity and gas rates for general consumers.
The International Monetary Fund has put strict conditions on the government regarding reviving the $6.5 billion Extended Fund Facility (EFF). After taking this measure, it is most likely that Pakistans agreement with INF will be finalized soon. Apart from increasing the rates of gas and electricity, under the pressure of IMF, the government has already increased the General Sales Tax (GST) from 17 per cent to 18 percent, resulting in a big hike in prices in the country.