Punjab withdraws Rs 14 power subsidy for ICT

Islamabad:

The Punjab government has decided to withdraw the electricity subsidy of Rs 14 per unit for consumers of the capital Islamabad with immediate effect while bowing to pressure from the International Monetary Fund.

The decision will deprive the consumers of the capital Islamabad of Rs.14

subsidy per unit for the month of September, according to a release issued by the Islamabad Electricity Supply Company (IESCO).

Consumers of Islamabad city and adjoining areas will now get their electricity bills at the new increased rates which the federal government had notified with effect from July 1 to comply with the IMF condition. The federal government had raised electricity prices by up to 51% thanks to the IMF, but still cannot secure loan approval.

Punjab Information Minister Azma Bukhari confirmed to The Express Tribune that the subsidy has been withdrawn in the capital city of Islamabad. “As per telephonic discussion dated 03-09-2024, instructions regarding discontinuance of CM Punjab Relief at Rs 14 per unit for residential single phase consumers with consumption range of 201 to 500 units are discontinued for capital city of Islamabad for the billing month in September 2024,” the notification said. The subsidy will continue for Punjab consumers till September 30.

The Express Tribune had exclusively reported on September 3 that the IMF had stopped all provinces from giving any subsidy during the 37-month period of the scheme and to discontinue the existing package of Rs 14 per unit till September 30.

However, in the case of ICT consumers, the Punjab government stopped the subsidy after one month – one month before the original expiry date.

“Punjab Chief Minister Maryam Nawaz Sharif wanted to give the subsidy to the consumers of Islamabad, but due to the agreement with the IMF, the people of Islamabad could not get this relief,” Bukhari said.

However, he maintained that the subsidy will continue for Punjab consumers for one more month till the end of September. The provincial information minister added that Prime Minister Shehbaz Sharif is taking steps to give relief to the people.

However, the Express Tribune reported last week that the IMF had also rejected Pakistan’s new plan to cut electricity prices by Rs 6 per unit by raising Rs 2.8 trillion. The plan had been based on flimsy assumptions of getting Rs 1.4 trillion from the four federal units, including Khyber-Pakhtunkhwa, and mobilizing more commercial loans.

The federal government had also delayed implementing a hike of up to 51% in electricity prices for up to 200 consumer units until October. This facility is also set to expire and consumers in the lower income brackets will face a big price shock from next month. Consumers in three provinces with a monthly consumption of more than 200 units are already facing the brunt.

The Punjab government has approved a subsidy of Rs 14 per unit in August and September electricity bills for consumers in the province and Islamabad using between 201 and 500 units. The provincial finance minister reportedly said the actual cost of the subsidy was Rs 90 billion, but the Punjab unjab chief minister said the cost would be Rs 45 billion.

The decision to end the electricity subsidy for consumers of the capital Islamabad will save a few billion rupees. It is now estimated that the two-month relief to Punjab consumers may cost the provincial government around Rs 60 billion.

After the Punjab government’s sudden subsidy package, the IMF had inserted another condition and bound all provincial governments not to introduce any policy or action that could be seen to undermine or contradict any of the commitments given under of the $7 billion program.

The new terms may also have implications for Punjab’s plan to provide Rs 700 billion to provide solar panels to consumers who have a monthly energy consumption of up to 500 units.

Due to poor governance, higher line losses, higher taxes, burden of subsidies on consumers with over 300 units of monthly consumption and costly agreements, electricity has now become unaffordable for the majority of household consumers.

These factors have pushed prices to Rs64 to Rs76 per unit for residential and commercial consumers. But instead of finding a permanent solution, both the federal and provincial governments of Punjab came up with a two-month subsidy scheme.