ISLAMABAD: The Ministry of Planning, Development and Special Initiatives has declined to implement the Economic Coordination Committee’s (ECC) directive to allocate an additional Rs50 billion in subsidies to power consumers over a three-month period, citing legal and budgetary constraints under the Public Finance Management (PFM) Act, 2019.
According to sources, the Planning Ministry referred to correspondence from the Finance and Power Divisions, asserting that Public Sector Development Program (PSDP) funds are strictly designated for approved development projects. Although the Federal Cabinet had approved the reallocation on July 8, 2024, the Finance Division later slashed the PSDP 2024–25 budget from Rs1,400 billion to Rs1,100 billion. This led to a collective Rs300 billion surrender by ministries to absorb the cut.
The Planning Ministry stated it cannot surrender an additional Rs50 billion but raised no objection if the Finance Division reallocates the funds from the previously surrendered Rs300 billion. It advised the Power Division to coordinate directly with the Finance Division.
The ECC had directed the Rs50 billion reallocation on May 5, 2025, as part of measures to meet circular debt (CD) reduction targets agreed with the International Monetary Fund (IMF). The Power Division had highlighted that Rs24.5 billion of the subsidy was earmarked for the solarization of 27,000 agricultural tube wells in Balochistan, under a joint federal-provincial initiative. A formal agreement on the project, worth Rs55 billion, was signed on July 8, 2024, with federal and Balochistan governments sharing costs at 70:30.
While Rs14 billion has already been disbursed via a Technical Supplementary Grant (TSG), the Power Division insists that the remaining funds are critical to achieving the revised CD target of Rs337 billion by June 2025. It submitted two proposals: first, for the Finance Division to surrender Rs50 billion to power subsidies, and second, to issue a TSG of Rs24.5 billion to fund the Balochistan solarization project.
Story by Mushtaq Ghumman
