KE’s tariff increased by Rs3.21 per unit

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The government on Tuesday approved a subsidy of Rs3.6 per unit for agriculture tube wells but increased tariff rate by Rs3.21 per unit for K-Electric’s (KE) residential consumers, in a move that shows hard choices between populist measures and meeting International Monetary Fund’s (IMF) requirements.

The Economic Coordination Committee (ECC) of the cabinet that took these decisions also allowed imposition of regulatory duties on man-made fabric in addition to allocating Rs15 billion for the Election Commission of Pakistan (ECP) for conducting general elections. Finance Minister Ishaq Dar presided over the ECC meeting.

In total, the ECC approved Rs139 billion in supplementary grants, including Rs93.4 billion for paying dues to the governmentowned power plants for reducing circular debt. The ECC discussed a summary submitted by the Ministry of National Food Security and Research on the Kissan Package 2022 and approved a base tariff for electric tube wells at Rs13 per unit, according to the finance ministry.

The base price has been cut from Rs16.60 per unit to Rs13 per unit, a relief of Rs3.60 effective November 1, 2022 to compensate for the damage caused by floods and heavy rains, it added.

The government will pick an unbudgeted subsidy of Rs28 billion and the amount is part of the Rs66 billion Kissan relief package announced by Prime Minister Shehbaz Sharif.

Farmers will get a total electricity subsidy of Rs124 billion in the current fiscal year. Still the farmers will be paying a minimum price of Rs23.40 per unit after including sales tax and the monthly fuel cost adjustment charges. The Power Division submitted a summary for increase in electricity prices for the consumers of KE – the country’s largest power distribution company covering Karachi and parts of Balochistan.

The ECC approved a tariff increase of Rs1.48 per unit for consumers of up to 100 units and Rs3.21 per unit for consumption of over 200 units. Prices for industrial consumers were increased by Rs4.45 per unit. It was submitted that K-E’s applicable uniform variable charge was required to be modified to maintain uniform tariff across the country with category-wise increases including the general supply tariff – residential and general supply tariff – commercial, industrial supply tariff, bulk supply tariff, agriculture tariff, and public lighting with recovery period of four months, said the finance ministry.

The Finance Division submitted a summary for the launch of Credit Guarantee Scheme under the Credit Guarantee Trust Fund through the Second Supplemental Trust Deed. It was pointed out that Pakistan Mortgage Refinance Company (PMRC) had been set up as a joint initiative of the government of Pakistan and commercial banks and development finance institutions (DFIs) to provide medium and long-term funding to the primary mortgage lenders by raising debt from the capital market at cheaper rates. Being the trustee, PMRC launched a scheme titled Credit Guarantee Trust Scheme under the First Supplemental Trust Deed.

To expand the provision of risk cover to financial institutions against financing in Pakistan’s housing sector, the World Bank approved an additional credit line for housing finance projects, which may be passed on to the Credit Guarantee Trust Fund. In view of the above, the ECC allowed launch of a new scheme titled Credit Guarantee Trust Scheme for low-income housing through the Second Supplemental Trust Deed with an amount of $85 million to be obtained from the World Bank to provide risk cover to the financing institutions in the housing sector. It was also shared that such adjustment shall be applicable to the consumption from Oct-22 to Jan-23 to be recovered from consumers in Dec-22 to Mar-23 respectively. The ECC after deliberation approved the proposal.

The Ministry of National Food Security and Research submitted a summary on the fixation and notification of minimum indicative prices for the tobacco crop of 2023. The ECC approved the minimum indicative prices for various types of tobacco in different areas and fixed it at Rs310 per kg for the Flue-curved Virginia in plain area and Rs351 for the mountainous area. These rates are lower than those recommended by the tobacco board. The snuff rate has been fixed at Rs146 per kg. The ECC approved Rs93.4 billion payment to the government-owned power plants. The money is already budgeted.

An amount of Rs43.7 billion will go to the Pakistan Atomic Energy Commission, Rs33.6 billion to Wapda and Rs16.4 billion to the LNG-fired power plants. The money will be released in three tranches of Rs31.2 billion each. The ECC approved imposition of 5% regulatory duty on manmade fabric, giving undue protection to two local producers, though they supply only 22% of the total local demand. The ECC reduced the regulatory duty on sodium carbonate from the current rate of 20% to 10%. The body approved a Rs2 billion subsidy for the Ministry of Information for media campaigns against the demand for Rs5 billion.

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