Ministry has no funds to pay for furnace oil
Power producers have consumed more than allocated subsidies.
Fuel suppliers need Rs47 billion to purchase furnace oil for power plants in the current month. PHOTO: ARIF SOOMRO/EXPRESS/FILE
ISLAMABAD:
An electricity crisis is brewing before the caretaker government takes over as the Ministry of Finance has no funds to pay to fuel suppliers to ensure smooth supply of furnace oil to power producers who have consumed more than allocated subsidies for the current fiscal year.
According to sources, the finance ministry has so far given tariff differential claims amounting to Rs235 billion to power producers against the target of Rs185 billion for the whole year.
The amount allocated for tariff subsidies has been exhausted and the finance ministry has no special funds to provide more, sources said.
Fuel suppliers need Rs47 billion to purchase furnace oil for power plants in the current month.
However, an official of the Ministry of Water and Power told The Express Tribune that out of the total estimated collection of Rs50 billion in electricity bills in March, power producers might pay Rs9 to Rs10 billion to fuel suppliers. Apart from this, he said, the finance ministry might provide Rs20 billion for furnace oil imports because of pressure from the power producers.
The ministry is also under pressure following revenue loss of Rs4 billion in March caused by withdrawal of oil price increase by the prime minister.
“Higher subsidies to power consumers against the target have caused an increase of 0.2 percentage points in the budget deficit,” an official said quoting the finance ministry, which was of the view that release of more funds would add to the miseries of the caretaker setup in managing the financial position as happened in the case of previous caretaker government.
Published in The Express Tribune, March 7th, 2013.
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An electricity crisis is brewing before the caretaker government takes over as the Ministry of Finance has no funds to pay to fuel suppliers to ensure smooth supply of furnace oil to power producers who have consumed more than allocated subsidies for the current fiscal year.
According to sources, the finance ministry has so far given tariff differential claims amounting to Rs235 billion to power producers against the target of Rs185 billion for the whole year.
The amount allocated for tariff subsidies has been exhausted and the finance ministry has no special funds to provide more, sources said.
Fuel suppliers need Rs47 billion to purchase furnace oil for power plants in the current month.
However, an official of the Ministry of Water and Power told The Express Tribune that out of the total estimated collection of Rs50 billion in electricity bills in March, power producers might pay Rs9 to Rs10 billion to fuel suppliers. Apart from this, he said, the finance ministry might provide Rs20 billion for furnace oil imports because of pressure from the power producers.
The ministry is also under pressure following revenue loss of Rs4 billion in March caused by withdrawal of oil price increase by the prime minister.
“Higher subsidies to power consumers against the target have caused an increase of 0.2 percentage points in the budget deficit,” an official said quoting the finance ministry, which was of the view that release of more funds would add to the miseries of the caretaker setup in managing the financial position as happened in the case of previous caretaker government.
Published in The Express Tribune, March 7th, 2013.
Like Business on Facebook to stay informed and join in the conversation.