*ISLAMABAD: The government is likely to withdraw the subsidy of Rs.5 perunit from June 1, 2022, extended to electricity consumers using 700 unitsmonthly across the country sans ToU (Time of Use) meters, under formerPrime Minister Imran Khan’s Relief Package on the pressure of InternationalMonetary Fund (IMF) and World Bank, well-informed sources told BusinessRecorder.*
Sharing the details, sources said, on a summary for the ECC submitted bythe Power Division, the ECC of the Cabinet, on March 7, 2022, approved arelief of Rs 5. KWh reduction in electricity bills for Discos andK-Electric’s commercial consumers having sanctioned load less than 5 kW anddomestic non-ToU consumers having monthly consumption up to 700 units for aperiod of four months – from March to June 2022. Moreover, the ECC of theCabinet approved a supplementary grant of Rs 106 billion divided into fourmonthly installments (Rs 26.5 billion each) to be released at the beginningof each month.
The relief package was notified in terms of Section 31 (7) of theRegulation of Generation, Transmission and Distribution of Electric PowerAct (NEPRA Act) 1997. The package was extended to the eligible consumersfor the months of March-May 2022 and, accordingly, Finance Divisionreleased Rs 39.75 billion only against the Tariff Differential Subsidy(TDS) requirement of Rs 79.5 billion and the consumers have already availedof the said relief in monthly bills of March, April and May 2022.
According to Power Division, the actual fuel cost component of generationcost has increased significantly as compared to notified reference fuelcost component. The notified reference of the fuel cost component is basedon assumptions of Rs. 54,484/MT RFO, Rs. 1,234/MMBTU RLNG and Rs, 12,084/Tcoal. The revised parameters are projected to be Rs. 170,000/MT RFO, Rs.2,805/MMBTU RLNG and Rs. 74,737/ MT coal. As per the mechanism, thedifference in parameters (reference vs actual) being charged to consumersthrough fuel cost adjustment is with two months’ lag.
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The sources said that Finance Division has released only Rs 39.75 billionagainst the approved subsidy requirement of Rs 79.5 billion. The case forthe release of Rs 26.5 billion is pending for release/ SAP entry withFinance Division which covers the period up to May 15, 2022. This hasresulted in an acute shortage of cash flow leading to disruption in theoperational activities of the power sector.
After explaining the case, Power Division has requested the ECC of theCabinet to consider and approve the withdrawal of the “PM Relief Package ofRs. 5 per unit notified March 18 2022” with effect from June 1, 2022.Further ECC may direct Finance Division to release the remaining amount ofRs 39.75 billion during the financial year for the period in which thepackage has already been availed by the consumers till May 31, 2022.
