The government fears that subsidies to the power sector, constituting 12 percent of the total budget, will sink the economy.
This was revealed by Secretary Power, Rashid Mahmood Langrial, during a recent meeting of the National Assembly Standing Committee on Power, presided over by Sardar Riaz Muhammad Khan Mazari, to discuss the performance of the power sector, its financial position, and issues.
Briefing the committee, the secretary said that the power sector was only functioning due to the subsidies being provided by the Finance Ministry, as it lost Rs. 1.072 trillion in one year. He added that the expenditure on subsidies to the sector was greater than the country’s defense budget.
He informed the committee that out of 36.595 million electricity consumers in the country, 31.5 million were domestic consumers. 11.2 million of these domestic consumers were eligible for subsidies causing a huge loss to the sector, he added.
As of 30 June 2022, the circular debt stood at Rs 2.253 trillion, of which payables to power producers were Rs 1.351 trillion, whereas payables of generation companies (GENCOs) to fuel suppliers were Rs. 101 billion.
During the previous fiscal year, Rs. 2.892 trillion were spent on electricity production, whereas the government received only Rs. 1.535 trillion, showing a shortfall of Rs. 1.351 trillion, reported the Business Recorder.
The secretary opined that the power sector was the main reason behind the economic pressure faced by the country. He said that the government’s policy to privatize power companies would only increase efficiency, but not the profits as a major portion of consumers rely on subsidies.
The Private Power & Infrastructure Board (Amendment) Bill, 2022, was also discussed and unanimously passed by the committee after minimal adjustments. The approval of the bill will merge Private Power & Infrastructure Board (PPIB) and the Alternative Energy Development Board (AEDB). However, the committee postponed the Electricity Generation, Transmission and Distribution Amendment Bill, 2021 till the next meeting due to a proposal of new amendments by committee members.
Members of National Assembly (MNA) Chaudhry Khalid Javed, Sardar Muhammad Arfan Dogar, Syed Ghulam Mustafa Shah, Engineer Sabir Hussain Qaimkhani, Saira Bano, Dr. Muhammad Afzal Khan Dhandla, Muhammad Abdul Ghafar Wattoo, Makhdoom Syed Sami-ul-Hussain Gillani, Mir Khan Muhammad Jamali and senior officers from the Ministry of Power Division attended the meeting.