Energy Division develops new Subsidy Mechanism

August 1, 2021

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The Ministry of Energy has contacted the National Electric Power Regulatory Authority (NEPRA) to approve a new Disco and KE Subsidy mechanism for local consumers developed by it. The aim of the new subsidy mechanism is to segregate local consumers into more categories to increase income.

The purpose of the new mechanism is to expand the definition of lifeline consumers to non-existent domestic consumers having maximum of last twelve months and current month’s consumption, which implies for 100 units two rates for 50 and 100 units per month will continue.

The new tariff support Subsidy is likely to take effect from September 2021, before the suspended IMF program is reinstated.

According to sources, the current Subsidy level was calculated at PKR 501 billion for the 2021-22 fiscal year, but the government has budgeted PKR 330 billion only.

Of this amount, PKR 26 billion are intended for 3936 industrial consumers paid with zero tax, PKR 18 billion – for 402 thousand former BPF consumers, PKR 2 billion – for AJ&K and PKR 15 billion – for 337 thousand industrial consumers for an industrial support package.

Subsidy of roughly PKR 70 billion will be provided to 18 million consumers using between 1 and 100 units per month.

The support amount for 5 million domestic consumers using 101-200 units per month is about PKR 85 billion and PKR 65 billion for those using 201-300 units.

One million consumers using 301-700 units are provided with subsidy worth 5 billion rupees, while consumers using more than 700 units per month are provided 6 billion rupees as Subsidy.