Punjab withdraws Rs14 power subsidy for ICT

The Punjab government has decided to immediately withdraw the Rs14 per unit electricity subsidy for the consumers of the Islamabad Capital Territory while succumbing to the pressure exerted by the International Monetary Fund.

The decision would deprive the consumers of the Islamabad Capital Territory from the Rs14

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

The consumers of Islamabad city and adjoining areas will now receive their electricity bills on the new increased prices which, the federal government had notified with effect from July 1 to comply with the condition of the IMF. The federal government had increased the electricity prices by up to 51% for the sake of the IMF but still it remains unable to secure the loan approval.

Punjab Information Minister Azma Bukhari confirmed to The Express Tribune that the subsidy has been withdrawn to the extent of the Islamabad Capital Territory. "As per telephonic discussion dated 03-09-2024, instructions regarding discontinuation of CM Punjab Relief at Rs14 per unit for domestic single-phase consumers having consumption range from 201 to 500 units is being discontinued for Islamabad Capital Territory for the billing month of September 2024," reads the notification. The subsidy will continue for the consumers of Punjab till September 30.

The Express Tribune had exclusively reported on September 3 that the IMF had stopped all the provinces from giving any subsidy during the 37-month period of the programme and to discontinue the existing package of Rs14 per unit by September 30.

However, in the case of the consumers of the ICT, the Punjab government discontinued the subsidy after one month – a 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 IMF agreement the citizens of Islamabad could not get this relief," said Bukhari.

She, however, maintained that the subsidy would continue for the consumers of Punjab for one more month till the end of September. The provincial information minister added that Prime Minister Shehbaz Sharif was 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 reduce electricity prices by Rs6 per unit by pumping in Rs2.8 trillion. The plan had been built on flimsy assumptions of getting Rs1.4 trillion from the four federating units, including Khyber-Pakhtunkhwa and raising more commercial loans.

The federal government had also delayed the implementation of up to 51% increase in the electricity prices for up to 200 units consumers till October. This facility is also going to end and the consumers falling in the lower income groups would face a major price shock from next month. The consumers of three provinces having monthly consumption of over 200 units are already facing the brunt.

The Punjab government approved the Rs14 per unit subsidy in August and September electricity bills for the consumers in the province and Islamabad, using from 201 to 500 units. The provincial finance minister had reportedly said that the actual cost of the subsidy was Rs90 billion but the Punjab chief minister unjab said that the cost would be Rs45 billion.

The decision to discontinue the electricity subsidy for the consumers of Islamabad Capital Territory would save a few billion rupees. It is now estimated that the two-month relief to Punjab consumers may cost the provincial government around Rs60 billion.

After the Punjab government's sudden subsidy package, the IMF had introduced another condition and made it binding upon all the provincial governments that they would not introduce any policy or action which could be considered to undermine or run against any of the commitments given under the $7 billion programme.

The new conditions may also carry implications for the Punjab's plan to dole out Rs700 billion under the head of giving solar panels to the consumers having monthly power consumption of up to 500 units.

Due to bad governance, higher line losses, higher taxes, putting burden of subsidies on the consumers of over 300 units monthly consumption and expensive deals, the electricity has now become unaffordable for the majority of the residential consumers.

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