No subsidy given to power sector last year, says ministry

ISLAMABAD: No subsidy given to the power sector in the previous fiscal year, the Ministry of Water and Power has acknowledged.

The ministry has said that a large part of the cost of power subsidy is being recovered by levying the tariff rationalisation surcharge on consumers.

The government releases over Rs100 billion in subsidy for the power sector every year and a major part of the subsidy cost is borne by power consumers.

The consumers pay over Rs200 billion every year in different surcharges and because of the high benchmark of transmission and distribution losses set by the National Electric Power Regulatory Authority (Nepra) – the regulatore of the power sector.

According to figures varying surcharges are paid by the consumers. On a bill of Rs5,000, domestic consumers pay over Rs 1150 in tariff rationalisation surcharge and the financial cost surcharge every month.

The government had imposed these two surcharges following a sharp fall in international crude oil prices to deny the benefit of the low prices to the consumers and divert it to the government kitty.

In a recent meeting of the Economic Coordination Committee (ECC), the Ministry of Water and Power revealed that in 2014-15 and 2015-16 no power-sector losses were paid from the federal budget. The losses were averaged Rs200 billion annually in the past.

It also brought down the power sector’s burden on the budget from 2.4% of gross domestic product in 2012-13 to around 0.7% of the GDP in 2014-15.

The power generation companies, which were suffering a cumulative loss of Rs7.78 billion in 2013-14, overcame the loss and reported a profit of Rs5.77 billion in 2015-16.