Govt reduces power sector subsidy by Rs 60 billion

* Imposes equalisation surcharge on commercial and industrial consumers in compliance with IMF guidelines

ISLAMABAD: The government has approved Rs 60 billion cut in power subsidy besides imposing equalisation surcharge on commercial and industrial consumers in a bid to strictly follow the International Monetary Fund (IMF) guidelines, official documents reveal.
The Ministry of Finance has decided to decrease electricity subsidy by Rs 60 billion in accordance with a written assurance sent to the IMF recently, while a surcharge has been imposed on commercial and industrial consumers, a senior official at the Power Ministry who wished not to be named told Daily Times on Tuesday. A copy of official documents available with this correspondent shows that that after the decision to decrease the power sector subsidy by the Finance Ministry, the Power Ministry has also reduced subsidy by Rs 60 billion for domestic consumers. 
Meanwhile, with the imposition of surcharge, the domestic consumers will be deprived of an expected relief of between Rs 0.24/unit to Rs 1.67 per unit in the days to come. Owing to the growing technical losses of the country’s power distributing companies (DISCOs), power sector regulator National Electric Power Regulatory Authority (NEPRA) earlier approved around 2 to 6 percent cut in power price for financial year 2013-14. So, for the first time it was hoped that power price for domestic, commercial and industrial consumers will decrease in the days ahead. 
But a meeting which was held on June 21 under the chair of Finance Minister Ishaq Dar and which was also attended by the minister of water and power decided that no power cut would be made in the power price for domestic, commercial, industrial consumers. 
The meeting also decided to maintain the power tariff at the current level till March 2015 by introducing a cut in subsidy, not to mention an end to the subsidy of Gujranwala Electric Supply Company (GEPCO) and various other power supply companies.
Besides all this, as per sources, power price for commercial and industrial consumers was expected to be decreased by Rs 1/unit. However, the finance and power ministries decided not to pass on this relief to the power consumers that are already bearing heavy brunt of high power tariff coupled with hours long power outages. 
The sources also decided in the meeting to collect additional amount from commercial and industrial consumers by imposing equalisation surcharge. This additional money would used for the payment of Rs 239 billion loan and its mark-up, which was obtained in the past from the banks to clear the burgeoning circular debt of power sector.
It has also been learnt from the document that the Finance Ministry has approved a Rs 1.50/unit cut in the subsidy for the customers of Lahore Electric Supply Company (LESCO), Rs 1.50/unit subsidy for Faisalabad Electric Supply Company (FESCO), Rs 2.50/unit for Peshawar Electric Supply Company (PESCO), Rs 5.15 for Hyderabad Electric Supply Company (HESCO), Rs 5/unit for Sukkur Electric Supply Company (SEPCO), Rs 1.91/unit for Quetta Electric Supply Company (QESCO), Rs 2.20/unit for Islamabad Electric Supply Company (IESCO) and Rs 0.92/unit subsidy for commercial and Rs 0.78/unit subsidy for industrial customers of GEPCO besides an end to the subsidy for commercial and industrial consumers of remaining DISCOs.

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