The government has decided in principle to gradually phase out subsidies available to electricity consumers using between 201 and 300 units per month, with the justification that the subsidies in power sector are nw unfeasible keeping in view the financial problems in the energy sector.
As per the report from Business Recorder, Under the subsidy plan, residential consumers are subject to the average monthly consumption of 300 units, with an estimated subsidy of Rs 19.4 billion.
As per the report, in order to phase out the subsidy, additional tariff slabs will be introduced for larger consumers.
Government is likel to add additional tariff slabs for for consumers who using more than 700 units per month, and revising the multimeter policy.
In addition, the targeting of agricultural wells consumers will be ensured to receive subsidies, and the subsidies will be zero-rate in relation to actual exports.
As per the available data existing level of support is estimated at Rs 421 billion, of which Rs 26 billion was provided to 3,936 zero-valued industrial consumers, Rs 38 billion to Azad Jammu and Kashmir, and Rs 18 billion to 402,000 former residential areas in tribal areas and Rs 36 billion 337,000 industrial consumers under the Industrial Support Package (ISP).
There is no Support for 1 million Lifeline consumers using up to 50 units per month , but the Rs 65 billion subsidy applies to 18 million consumers using 1-100 units per month. The subsidy for 5 million local consumers using 101-200 units per month is Rs 78 billion and Rs 59 billion for those using 201-300 units.
The number of consumers using 301-700 units is 1 million, who are availing subsidy of 5 billion rupees, while consumers using more than 700 units per month avail 6 billion rupees as subsidy.
Tariff increases are expected to be more than Rs 5 per unit by 2023 to reduce the circular debt to zero. However, if the government decides to give releif to the public, the tariff increase may be lower.
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