The delay in fund utilisation and the security situation have hampered progress on a multibillion-rupee project for solarising agricultural tube wells in Balochistan. The matter was taken up in a recent meeting of the Economic Coordination Committee (ECC).
During the discussion, the ECC was informed that the decision on solarisation was taken in July last year, so the amount could not be budgeted and is now being claimed through the technical supplementary grant, which should fully discharge the federal government's responsibility for its share in the scheme.
It was informed that Quetta Electric Supply Company (Qesco) was experiencing difficulties in retrieving the material due to ongoing security-related issues. It was further explained that due to the peculiar security situation, the provincial government is required to first clear the area before retrieval of the material, which is a time-consuming process.
However, the task is underway, and the first validation report regarding the project would be furnished in the second week of May 2025 by a third party. It was emphasised that the report of the third party needs to be reviewed and therefore it would be appropriate if ECC undertakes that review. The Prime Minister's Office had conveyed to the Power Division on May 13, 2024 to firm up a plan for off-grid solutions, including the solarisation of tube wells in Balochistan, in the budget for FY 2024-25.
Subsequently, consultative meetings were held under the chairmanship of the minister for power and the chief minister of Balochistan, in which the minister for commerce, minister of state for power, provincial ministers of Balochistan, secretary Power Division and chief secretary Balochistan, along with power sector specialists, participated.
The recommendations were presented before the prime minister during a meeting on July 2, 2024, wherein the forum decided the solarisation of approximately 27,000 agricultural tube wells through compensation of up to Rs2 million per tube well having a legal electricity connection, subject to disconnection from the grid.
It was also decided that the cost of providing part-financing for the solarisation of these tube wells, amounting to approximately Rs55 billion, would be borne by the government of Pakistan and the government of Balochistan in a 70:30 ratio, respectively.
Accordingly, a detailed agreement with an implementation mechanism in the form of standard operating procedures and a steering committee was signed on July 08, 2024 by the secretary, Power Division, and the chief secretary, Balochistan, on behalf of the respective governments.
The federal government has released an amount of Rs14 billion through a technical supplementary grant from the budgetary allocation of the National Food Security and Research Division under the Prime Minister's National Programme for Solarisation of Agriculture Tube Wells in Pakistan.
The ECC was informed that the remaining amount of Rs24.5 billion is to be provided from the allocation under 'additional subsidy' for the power sector, as proposed by the Finance Division.
It was highlighted that in order to achieve the revised CD flow target of Rs337 billion by June 2025, the Power Division needs to utilise the full amount of budgeted subsidies of Rs1,229 billion against the payables. It was also pointed out that the federal cabinet, vide its decision dated July 8, 2024, approved reallocation of Rs50 billion from the PSDP to fund the additional tariff differential subsidy requirement. This was also part of the Rs1,229 billion allocated for power sector subsidies.
Accordingly, the division was of the view that presently the same amount can be allocated from the power sector budget as proposed by the Finance Division. However, in case of any shortfall, the same amount should be remitted back to the Power Division in June 2025 to meet the CD targets agreed with the Fund.
Approval of the ECC was solicited to direct the Finance Division to surrender Rs25 billion from the PSDP for power subsidy as per the cabinet's approval dated July 8, 2024. Approval of a grant of Rs34.5 billion was sought for the solarisation of agricultural tube wells in Balochistan.
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