Business

IMF wants govt to pass on Rs65bn burden to power consumers

Published

2 years ago

Farwa

Government has agreed with IMF that Rs55 billion would be passed on to consumers.
Remaining Rs10 billion would be absorbed through subsidy.
Pakistan’s cash-bleeding power sector is moving rapidly towards bankruptcy.

ISLAMABAD: The International Monetary Fund (IMF) has asked Pakistan to pass on Rs65 billion to consumers of electricity which has been deferred in the shape of Fuel Price Adjustments (FPA) during the peak of last summer season.

Out of the total outstanding amount of Rs65 billion on account of deferment of FPA in the electricity bills in the current fiscal year, the government has agreed with the IMF that Rs55 billion would be passed on to consumers and that would be recovered through bills. The remaining Rs10 billion would be absorbed through the allocation of subsidy amount.

In a grim situation, Pakistan’s cash-bleeding power sector is moving rapidly towards bankruptcy, as its total accumulated losses might climb up to Rs1,734 billion for the current fiscal year with the adoption of a status quo approach.

On the other hand, the consumers consider themselves voiceless because the word reform means hiking of tariffs, but actually it results in jumping theft in this sector.

Out of the total accumulated losses of Rs1,700 to Rs1,800 billion, there is a possibility of a subsidy of Rs1,000 billion and around Rs700 to 800 billion piling up in the monster of circular debt if no remedial measures are taken by the government.

Now, the multilateral creditors, including IMF/World Bank, are asking the government to come up with plans to finance the un-budgeted subsidies, including the K-Electric subsidy for which the Ministry of Finance allocated Rs26 billion against revised projections of Rs162 billion, surfacing a gap of Rs136 billion where no amount was available to bridge this gap.

The same scenario prevailed for the Zero Rating Industry (ZRI) and Kissan Package for which the government did not make subsidy allocations of Rs118 billion and Rs28 billion respectively in the current fiscal year.

The IMF also raised concerns over the failure to receive a deferred payment of bills on account of Fuel Price Adjustment, which is estimated to cost Rs65 billion. The bill recovery was reduced from the original target of 93.58% to 92%, creating a gap of Rs55 billion in the current fiscal year.

The theft of electricity target is also missed as the Transmission and Distribution (T&D) losses target was revised upward from 15.83% to 16.27%, which would result in a deficit of Rs31 billion.

The generation cost recovery is going to cause a financial loss of Rs63 billion. Rs24 billion for May-23 and Jun-23 FCA and Rs39 billion for Q3 & Q4 FY-23 Quarterly Tariff Adjustment (QTA) would be recovered in FY-24.

The hike in markup in recent months also jumped up liabilities of the power sector as the markup on IPPs and Power Holding Company increased from Rs185 billion to Rs249 billion, registering an increase of Rs64 billion.

The K-Electric resolution of subsidy will cause an additional burden of Rs136 billion for which the Finance Division did not make any budgetary allocation in the budget.

In the wake of less demand for power from 45 billion units to 40 billion units in the first quarter of the current fiscal year, the revenues dropped from Rs493 billion to Rs347 billion, registering a loss of Rs55 billion. The non-recovered GST paid to FBR is projected to cause a loss of Rs91 billion in the current fiscal year.

Now, it is expected there will be a possibility of generating financial losses in the range of Rs700 to Rs800 billion accumulating into the form of circular debt in the current fiscal year if the government did not hike the tariffs, bring efficiency and improve governance in cash-bleeding power sector.

Business

An investigation was “launched” into PTA’s inability to get Rs. 78 billion back from Telcos

Published

22 hours ago

Farwa

The PTA has reportedly been instructed to reply to NAB by July 29. According to the enquiry, the national exchequer has suffered losses as a result of the delay in collecting dues.

The PTA has been asked to provide NAB with information about any pertinent records, court proceedings, and overdue bills. The NAB Karachi has summoned the PTA officials to appear with all pertinent documentation.

All of the principle sum has to be paid by the LDI firms, according to sources. But due to judicial stay orders, the collection of dues has been impeded.

These sources further state that a steering group has been established by the Ministry of IT to supervise the issue of dues recovery.

In a previous event, the tariffs levied on importing cell phones from outside were clarified by the Pakistan Telecommunication Authority (PTA).

Contrary to what some internet reports claim, PTA clarified in response to recent news regarding the tariffs on mobile phone imports that there hasn’t been a formal decision to remove these levies in Pakistan.

the PTA.Pakistanis living abroad will be the only ones free from these levies, according to the PTA. A SIM card can be inserted and the phone restarted to temporarily register a device for non-PTA mobile subscribers.

Business

Weekly inflation in Pakistan increased by 0.17 percent.

Published

22 hours ago

Farwa

The SPI for the week under review in the aforementioned group was reported at 321.95 points, as opposed to 321.40 points during the previous week, according to the PBS statistics.

The SPI for the combined consumption group saw a 20.09 percent increase in the week under review compared to the same week the previous year.

The weekly SPI includes 51 necessary items for every spending group and 17 urban areas, with a base year of 2015–16 = 100.

The SPI for the lowest consumption category, which is up to Rs 17,732, grew by 0.08 percent from 311.97 points to 312.22 points this past week.

0.18 percent,The index of consumption for the lowest consumption groups, which are Rs 17,732-22,888, Rs 22,889-29,517, Rs 29,518-44,175 and above Rs 44,175; increased by 0.13 percent, 0.15 percent, 0.18 and 0.19 percent, respectively.

Nineteen (37.25%) of the fifty-one commodities had price increases over the week, eight (15.69%) had price decreases, and twenty-four (47.06%) had unchanged pricing.

On a weekly basis, the following commodities saw significant price decreases: tomatoes (9.19%), onions (2.14%), LPG (1.04%), bananas (0.53%), wheat flour (0.35%), potatoes (0.17%), pulse masoor (0.16%), and bread (0.05%).

Chicken (4.80%), garlic (2.01%), pulse gramme (1.87%), eggs (1.71%), beef (0.93%), gur (0.89%), pulse moong (0.84%), fresh milk (0.45%), firewood (0.23%), and cigarettes (0.12%) were among the items whose average prices increased significantly week over week.

The commodities that saw a year-over-year decline were: wheat flour (31.75%); cooking oil (13.44%); vegetable ghee 2.5 kg (10.42%); vegetable ghee 1 kg (9.85%); mustard oil (8.33%); eggs (5.82%); rice basmati broken (4.15%); and tea package (2.52%).

Gas prices for Q1 (570.00%), onions (96.01%), pulse gramme (40.39%), powered milk (39.11%), garlic (34.61%), pulse moong (29.77%), men’s sandals (25.01%), beef (23.52%), salt powder (23.28%), pulse mash (22.50%), and energy saver (17.96%) were among the commodities whose average prices increased year over year.

Business

The price of gold has drastically dropped in Pakistan.

Published

2 days ago

Farwa

As per the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA), the cost of 24-karat gold per tola decreased by Rs 2,300, standing at Rs 250,500.

A kilogramme of 24-karat gold costing Rs1,972 less at the local market, making it worth Rs2114,763. Ten grammes of 22-karat gold had a price decrease to Rs196,866 as well.

After losing a significant $43 during the day, the rate per ounce of gold on the international market also decreased. It currently stands at $2,370.

On Thursday, the price of 24-karat silver also experienced a decline, falling by Rs60 to settle at Rs2,860 petal.