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Thursday July 18, 2024

Rs1.19tr subsidy to contain power circular debt at Rs2.3tr

The circular debt went up to Rs2.6 trillion in March in the outgoing fiscal year

By Khalid Mustafa
June 13, 2024
A representational image of high voltage electricity lines. — X/@MoWP15/File
A representational image of high voltage electricity lines. — X/@MoWP15/File

ISLAMABAD: The government has announced Rs1.19 trillion subsidy for the power sector for the next budgetary year. But the release of the monthly subsidies would determine if the government will be able to contain the circular debt to Rs2.3 trillion — a figure that has been promised to the IMF.

The circular debt went up to Rs2.6 trillion in March in the outgoing fiscal year. The government has to bring it down to Rs2.3 trillion which is why the government has allocated the massive amount of Rs1.91 trillion for subsidy in the power sector, which is higher by Rs103.767pc if compared with the amount of Rs584 billion actually released by the Finance Division in the outgoing financial year. The government had announced the subsidy of Rs894.075 billion in the budget for 2023-24, but it actually released Rs584 billion, 34.68 per cent less than the budgeted amount of Rs894.075 billion causing a hike in circular debt to Rs2.6 trillion. When contacted, one of the top men of the Power Division said that the containment of circular debt to Rs2.3 trillion depends upon the timely releases of subsidy from the finance ministry on monthly basis out of the budgeted amount of Rs1.19 trillion for the next FY25.