New electricity rate: Farmers win power subsidy bonanza

Published: September 6, 2013
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Chief minister Shahbaz Sharif and Federal Finance minister Ishaq Dar addressing a press conference. PHOTO: ONLINE

Chief minister Shahbaz Sharif and Federal Finance minister Ishaq Dar addressing a press conference. PHOTO: ONLINE

ISLAMABAD: 

The federal government on Thursday announced a Rs23 billion subsidy for the agriculture sector in a move that is likely to invite the International Monetary Fund’s scrutiny.

The decision was made at a meeting between Finance Minister Ishaq Dar, Punjab Chief Minister Shahbaz Sharif and the Kissan Ittehad Council (KIC) – a representative body for farmers – just 24 hours after the international lender approved a $6.7 billion loan for the country.

Talking to reporters, Dar said the government had decided to provide farmers electricity for powering tube wells at a flat rate of Rs10.50 per unit till June 30, 2014. The government, according to him, has decided to pick up the difference between the cost of power generation and the rates for farmers, which amounts to Rs23 billion. The finance minister further said the government would also have to bear a Rs6 billion loss in general sales tax following the move.

The IMF bailout comes with the condition that the government gradually eliminates subsidies for all power consumers using more than 200 units of electricity a month. The announcement of a new power subsidy hours after the loan was announced may invite scrutiny from the IMF.

However, a senior finance ministry official told The Express Tribune that the government did not lose anything after entering the agreement with the farmers’ community. He said the government had told the IMF that the electricity for tube wells would be sold at a rate of Rs9.75 per unit.

The finance minister, too, said the government’s decision “does not matter, since between 5pm and 11pm, the agriculture sector does not get electricity.”  “It is unfortunate that the agriculture sector, which represents nearly a quarter of the economy, does not get benefits.”

The government has already eliminated subsidies for industrial consumers and is now moving on to minimum determined tariffs for commercial, bulk and Azad Jammu and Kashmir consumers, according to officials. For these categories, Pakistan has assured the IMF that it will increase average weighted tariffs by 50%.

For domestic consumers, the weighted average notified electricity tariffs will be increased by 30% with effect from October 1, they added.

The previous coalition government headed by the Pakistan Peoples Party had approved the flat rate of Rs8 per unit on March 7, 2013 – a move many termed a political gimmick. The then government, however, failed to finalise a mechanism for the payment of the subsidy, which had been estimated to cost around Rs16.5 billion per annum.

Before the PPP government’s decision, the farmers had been getting electricity at a flat rate of Rs10 per unit for tube wells.

Published in The Express Tribune, September 6th, 2013.

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Reader Comments (11)

  • kala_bacha
    Sep 6, 2013 - 4:50AM

    Farmers = MNA, MPA, CM, Governors and the list goes on. Simply says, government give subsidy to above name people. What a joke ? Awam keep paying more and more but these jaghirdar continues to get subsidy.

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  • Dj
    Sep 6, 2013 - 4:53AM

    That’s all it takes, a meeting and there goes millions of dollars. No study conducted, how to manage resources, no tax introduced, no plan on how to generate more electricity. This is what happens when a failed accountant manages your country’s finances.

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  • A2Z
    Sep 6, 2013 - 5:32AM

    They simply don’t pay the tax. What other benefits are they looking for?
    Please document the economy if you want to bring this country out of the debt.

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  • A. Khan
    Sep 6, 2013 - 6:30AM

    There goes the IMF money. Its no wonder that there is hardly anything to show for all the loans been taken by various governments. We should learn to live within our means. IMF should cancel the loan.

    This also means higher rates for urban people who actually pay the full rates plus the subsidy.

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  • A a k burni
    Sep 6, 2013 - 8:31AM

    Pakistan and mosly all muslim dominating countries have Tribal based system ie, Feudal Lords. They have grsped the power corridor of Pakistan. The snatch subsidy in all inputs ie, subsidised pesticides, subsidised irrigation water, worst minimum electricity power, subsidised pesticides and as a result they get Support price of their produce. Simultaneously the FEUDAL LORDS are immune to pay the the agricultural income tax.

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  • Bilal
    Sep 6, 2013 - 10:15AM

    My dad is a Farmer in Sialkot Region which comes under Gujranwala division comprises or 6/8 districts none of the farmer runs tube well on electricity no canal system even, All the tube wells are running on Lubricants diesel etc.
    to what i believe in Punjab all the middle level farmers they run their tube wells on lubricants, and in other area’s they have canal system they get water from for their lands.

    Now comes electricity Tube wells: All the benefit goes to Land lords/feudal lords of South Punjab and sindh. What a laughing stone this nation is.. So basically all this was for feuds.. no wonder why are we in this situation..

    Remind you: Feudal lords they also take bank loans and dont return that either.

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  • meedan
    Sep 6, 2013 - 10:44AM

    How many acre of agricultural land does our Judiciary have, if non than where is the sou motto.
    What action are taken to collect the tax from these parasites. it is the only duty of salaried person to give tax . the whole country is surviving on salaried persons

    KHUDA IS MULK MAIN KISI FAQEER KO HUKUN RAN BANADAY

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  • ABKhan
    Sep 6, 2013 - 11:48AM

    Just a coincidence that thousand of acres of land used by “Shareefs” is declared agricultural in Raiwand

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  • Sikander Fayyaz Bhadera
    Sep 6, 2013 - 1:03PM

    I am member of Kissan Ittehad, as well as PTI. Kissan Ittehad has been struggling for over a year for standard power rates. This assumption that only ‘land lords’ have tube-wells is as absurd as it gets. Majority tube-well users are small farmers, who do not have access to to canal water. There would be a few farmers with larger holdings, but 90% are small farmers. If anyone thinks this is untrue, they can confirm this directly.Recommend

  • ali ahmed
    Sep 6, 2013 - 1:34PM

    these politicians has made pakistan…the lost tribes of desert…

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  • Sep 6, 2013 - 5:06PM

    @ Bilal
    The farmers, peasants,middle class and working class people of Central Punjab give their vote to PML(N) but power subsidy is doled out to the feudal of Southern Punjab and interior Sind. A food for thought for the electorate of Central Punjab.

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