The federal government will soon introduce a rationalized framework for granting electricity subsidies. The beneficiaries of the targeted mechanism would be identified through the Ehsaas program while the power subsidy received through tube wells will be abolished.
The government intends to eliminate subsidies for the affluent segment of the society where possible and extend its benefit to the impoverished segment. In this regard, the government has slashed the cost of power sector subsidies by 60% in the federal budget for FY 2020-21.
According to finance ministry officials, influential landlords had set up tube wells and had been receiving subsidies on the first 300 electricity units for years. The power sector subsidy to the wealthy segment of the society cannot be justified in any way and will be removed soon.
The latest measure is a part of the plan that Pakistan will share with the International Monetary Fund (IMF), outlining ways to mobilize the tax revenues, eliminate circular debt, and fixing the power sector tariff mechanism to revive the $6 billion program that had stalled due to the Coronavirus outbreak.
Moreover, Pakistan will also show IMF the proposed amendments to the State Bank of Pakistan (SBP) and National Electric Power Regulatory Authority (NEPRA) Acts to grant additional autonomy to both regulators.
Officials at the finance ministry have also shot down rumors of trust issues between IMF and Pakistan. The country is working in close coordination with the IMF, Asian Development Bank, and the World Bank, the officials added.