The federal cabinet has approved the revised circular debt management plan for power through circulation under which the government will increase power prices and end subsidies to pacify IMF.
According to sources, under the plan, the government will increase the electricity price by Rs7.91 per unit in four quarterly adjustments – Feb-March 2023, March-May, June-August and September-November to meet the tough conditions of the IMF.
Sources claimed that the federal cabinet also approved the withdrawal of electricity subsidy of Rs65 billion given to the exporters and farmers, with effect from March 2023. The subsidy of Rs12.13 per unit on electricity given to export sector will be withdrawn, they added.
Moreover, almost Rs250 billion will be recovered from electricity consumers by June 2023. Under the circular debt management plan, the government would impose a surcharge of Rs3.39 per unit.
The government will charge Rs3.21 per unit from now onwards, 69 paise from March-May and increasing again to Rs1.64 per unit from June onwards to August of 2023. From Sep-Nov, the govt will hike power tariff by Rs1.98 per unit.
Sources claimed that the government would recover Rs65 billion by June after withdrawing the subsidy given to farmers. Meanwhile, Rs51 billion would be recovered by withdrawing subsidy for exporters. The government would also recover Rs14 billion after the withdrawal of subsidy under Kissan package, sources added.
Earlier on Friday, the Economic Coordination Committee (ECC) of the federal cabinet has approved a revised plan for managing the power sector’s circular debt, said a press release issued by the Finance Division.
The Ministry of Energy presented a summary of refinancing the debt of Power Holding Limited and a surcharge to recover the markup payments.
The ECC approved the proposal to recover Rs76 billion, exempting non-Time of Use domestic consumers who use less than 300 units and private agriculture consumers for four months from March 2023 to June 2023, to recover the markup charges of PHL loans.
An additional surcharge of 1 rupee per unit for FY24 will also be imposed to recover the additional markup charges not covered through the existing FC surcharge. The surcharges will be applicable to K-Electric consumers to maintain a uniform tariff across the country.
