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Rs. 975 billion power subsidies proposed

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The Ministry of Finance has refused to pay for the cost of inefficiency or for clearing arrears of the China-Pakistan Economic Corridor (CPEC) energy projects and has instead proposed subsidies worth over Rs. 975 billion for the power sector, 37% less than the money demanded.
Sources say after a meeting between the Ministry of Finance and the Ministry of Energy, the Q-Block has recommended over Rs975 billion in power subsidies for the fiscal year 2023-24, starting from July. The recommended funds will primarily cover the cost of difference between consumer price and generation cost and subsidies for Azad Jammu and Kashmir (AJK).
At this point in time, the finance ministry has not entertained the Power Division’s demand for Rs200 billion in CPEC arrears, said the sources, adding that the ministry has, however, agreed to give Rs48 billion to clear up to 87% of the current power generation bills of the CPEC power plants.
It is to note that the outstanding CPEC dues are one of the irritants in the way of smooth Pak-China economic relations.
Additionally, the finance ministry did not allocate any funds to bear the cost of inefficiency witnessed in Quetta Electricity Supply Company (QESCO) and in the AJK areas. Funds for the Kissan package, exporters subsidies, and to compensate for the inefficiencies of the energy ministry due to its failure to collect due electricity bills from the federal and the provincial government have also not been proposed.
The Ministry of Energy had demanded Rs1.54 trillion in power subsidies for the next fiscal year, a colossal amount that is 70% more than this year’s revised budget. The demand was surprising since the government has twice increased electricity tariffs in the outgoing fiscal year in order to reduce subsidies and control circular debt.

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