ISLAMABAD – The federal government has released a subsidy of Rs 159 billion to the power sector from July 1 to December 18 of the current fiscal year, which is mere a 13.36 percent of the total budgeted subsidies of Rs1,190 billion allocated for the sector in FY 2024-25.
However, an additional Rs50 billion is set to be released, bringing the total subsidy disbursed to Rs209 billion during the first two quarters of the current fiscal year, official data revealed.
According the data available with The Nation, the accumulation of circular debt during this period stands at Rs70 billion, which is approximately Rs389 billion lower than the figure agreed upon with the IMF. Under the agreement with the IMF, the power sector is required to limit the increase in circular debt to less than Rs461 billion by the end of December 2024. As of December 19, 2024, the circular debt flow has reached only Rs70 billion, well below the target set for the end of the year. This substantial shortfall suggests that meeting the target remains well within reach. During the first quarter (July-September 2024), Rs128 billion in subsidies were released to the power sector. In the second quarter, Rs31 billion has already been disbursed, with an additional Rs50 billion expected to be released soon.
The total budgeted subsidies for the power sector, including WAPDA, PEPCO, and K-Electric, amount to Rs1,190 billion for FY 2024-25. Of this, Rs276 billion has been allocated for the Inter-DISCO Tariff Differential in the current fiscal year. The budgeted subsidies for K-Electric in FY 2024-25 are Rs252.50 billion, which include Rs174.5 billion for the Tariff Differential and Subsidies for Agriculture Tube-Wells in Balochistan, and Rs88 billion for Tariff Differential Subsidies (TDS) for K-Electric’s areas. Additionally, Rs65 billion has been earmarked as a subsidy for the merged districts of Khyber Pakhtunkhwa (erstwhile FATA), Rs108 billion for Tariff Differential to Azad Jammu and Kashmir (AJK), Rs48 billion for the Pakistan Energy Revolving Fund (PERA), and Rs9.5 billion for the Tariff Differential Subsidy to Agriculture Tube-Wells in Balochistan under PEPCO. Moreover, Rs509 billion has been allocated as a lump sum power subsidy in the FY 2024-25 budget.
With the improved performance of loss and recovery, it is expected that the power division will safely remain within the target set for the end of December 2024, the data claimed. The target agreed with the IMF is for managing the circular debt within certain limits during each quarter and the power sector is well within limit, it added. Notably, for the previous FY 2023-24, of the total budgeted subsidy of Rs894 billion for power sector including WAPDA, PEPCO and K-Electric, a subsidies of Rs584 billion were released.
