The Senate Special Committee on Circular Debt Tuesday stressed the need for providing targeted subsidy on electricity as the government had set aside about Rs150 billion for this purpose to be utilized during the current fiscal year (2018-19).
“We need to provide targeted subsidy on electricity and provide relief to low-income people,” said Syed Shibli Faraz, Convener Senate Special Committee on Circular Debt, while chairing the meeting of the committee in Islamabad on Tuesday.
The meeting was convened to discuss various issues pertaining to mounting circular debt and find its remedies. Among others, the meeting was attended by Senators Sikandar Mandhro, Bahramand Khan Tangi and officials from Finance, Water Resources and Power ministries, power distribution companies, Alternate Energy Development Board (AEDB) and other relevant departments.
Joint Secretary Ministry of Power informed the Committee that the government would provide Rs150 billion subsidy during current fiscal year, including Rs 92 billion as tariff differential subsidy, Rs12 billion agriculture power consumption subsidy and Rs 9 billion in Baluchistan province. Similarly, Rs 31 billion would be provided to K-Electric and Rs15 billion to Industry thorough Industrial Support Package, he said.
Subsidy would facilitate low-income consumers who are using 100-300 units of electricity and industrial and agriculture sector. The Committee discussed in detail the issue pertaining to circular debt and its remedies and observed that the circular debt was piling up due to many issues including delay in releases of agricultural and tariff differential subsides, poor recovery, transmission and distribution losses and determination of tariff less than requested.
The Committee was informed that as many as Rs 231,117 million were receivables as on December 2017 which include Rs 172,000 million receivables from consumers, Rs 21,075 million agricultural subsidy from federal government, Rs17,796 million agriculture subsidy from government of Balochistan and Rs 20,245 million tariff differential subsidy.
Similarly, there were about 22.24 percent losses, which were having financial impact of Rs3,528 million. “Resolution of circular debt should be a top priority,” the Convener said and observed that it was eating more than the public sector entities including Pakistan International Airlines.
On the occasion, the Joint Secretary Ministry of Power informed the Committee that there were total 26 million electricity consumers including 0.327 million agriculture consumers (1.2 percent of total). He said that out of the total number of electricity consumers, 51 percent consumers were using below 5 kilowatt electricity while 23 percent were using more than five kilowatt electricity.
QESCO representative informed the Committee that there was about 86 percent recovery in domestic and commercial sector in Baluchistan which consume about 230 megawatts of electricity. There were, however, nominal recoveries in the agriculture sector, which helps in mounting circular debts, he added.
The AEDB CEO gave a detailed briefing to the Committee and highlighted various areas where active interventions were required to tap the potential of alternate energy. He particularly mentioned that Baluchistan was having more potential in alternate energy development than Sindh, which needed to be exploited