The government has no plan to extend cash grant to BISP beneficiaries across the country against subsidized 50 units' electricity per month, well informed sources told Business Recorder. Federal government is supplying electricity to lifeline consumers at Rs 2 per unit (maximum consumption of 50 units a month) whereas average cost of one unit is Rs 10 per unit which implies that a subsidy of Rs 8 per unit is being extended to them.

Former Secretary Water and Power Younus Dagha, at a recent meeting of National Assembly Standing Committee on Commerce, maintained that poor consumers are being crossed subsidized by the industrial and commercial consumers.

International Monetary Fund (IMF) in favour of slashing power subsidies, in its recent report under article IV consultations stated that subsidies remained sizable, with an overall envelope larger than the combined disbursements under social safety nets programmes. According to the Fund, electricity subsidies, representing the bulk of subsidies, were substantially reduced in recent years but remain sizeable and poorly targeted. Further, reducing electricity subsidies and improving their targeting are needed to free up public resources and increase targeted social safety nets and growth-supporting expenditures.

IMF further contends that reducing the consumption threshold to benefit from the concessional electricity tariff, or fully eliminating electricity subsidies while increasing targeted cash transfers to the poor should be explored. When contacted, one of the officials of Water and Power Ministry said the decision regarding reduction in subsidies was to be taken by the Finance Ministry at the highest level, adding that Water and Power Ministry had nothing to do with provision of subsidies. "Finance Ministry is not responsible for taking decisions regarding subsidies. We just implement such decisions through power Distribution Companies (Discos) and submit claims of subsidy," he added. Disbursements under BISP have more than tripled since the launch of the programme while, in parallel, untargeted energy subsidies were reduced. BISP budget has been increased to Rs 115 billion in 2017-18 from Rs 40 billion in 2012-13.

Electricity subsidies represent the bulk of subsidies, at about 0.6 percent of GDP in FY 2015/16. "Lowering the consumption threshold for the concessional electricity tariff would contribute to making remaining electricity subsidies less regressive and reducing their level. Also, since many among the poor might not have electricity access, subsidies could be fully eliminated and targeted cash transfers to protect the poor could be stepped up," the IMF argued.

Copyright Business Recorder, 2017