World Bank, ADB agree to Rs67bn power subsidy

ISLAMABAD: As per the outcome of negotiations between the World Bank, the Asian Development Bank and the government, the electricity consumers would be able to avail a subsidy worth Rs67 billion during the current fiscal year.

The tough three-day negotiations concluded here on Wednesday, with the World Bank Mission expressing concern over the government’s resolution to pass on the subsidies to the power consumers.

Currently, the government was providing Rs122 billion subsidy to the consumer on electricity.

The officials, who participated in the negotiations, told Dawn that the government had agreed to withdraw Rs55 billion in power subsidies during the current fiscal year.
However, the schedule for power tariff raise had not yet been finalised, the officials added.

The World Bank and the ADB teams finally agreed that subsidies worth Rs67 billion on electricity could be given during this fiscal year with Rs55 billion cushion provided by the IMF and that would be diverted from the development budget.

While, the government would provide 100 mmcfd gas for power generation that would be worth around Rs12 billion, sources said.

Adviser to the PM on Petroleum Dr Asim Hussain confirmed to Dawn that the new gas discoveries in the NWFP would be directed to the Pepco.

‘These new finds are expected to provide commercial production of 100 mmcfd gas,’ he said, adding that a summary would be presented to the ECC to seek approval for this allocation.

Responding to the World Bank concerns over continuing subsidies on electricity the Pakistan side maintained that tariff would be raised gradually linking it with the elimination of load-shedding.

The sources revealed that the tentative schedule for increasing electricity tariff would be five to seven per cent in the second quarter of 2009-10 followed by another 10 per cent in the third quarter. link.....