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K-Electric gets highest federal subsidy of Rs169bn

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1 year ago

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  • KE subsidy is being fulfilled by federal budget.
  • Iesco, Lesco and Fesco subsiding other Discos.
  • KE says gas supply to captive power plants be stopped.

ISLAMABAD: The federal government is providing the highest subsidy to K-Electric as compared to the state-run Power Distribution Companies (Discos), it emerged Wednesday.

According to the Ministry of Energy (Power Division) statistics, the net required subsidy of K-Electric is Rs169 billion and is being fulfilled by the federal government budget.

Among the Discos, three are Islamabad Electric Supply Company (Iesco), Lahore Electric Supply Company (Lesco) and Faisalabad Electric Supply Company (Fesco), which are subsidising the remaining seven Discos with a total amount of Rs156 billion per annum, Federal Secretary of Power Division Rashid Mahmood Langrial told The News.

The share of Iesco is Rs68 billion, Lesco Rs83 billion and Fesco Rs5 billion as cross-subsidising the other companies (except K-Electric).

The three do not need to take subsidies from the federal government.

Besides, the federal government is also subsidising the consumers of other Discos with a combined subsidy amount of Rs158 billion, a bigger amount than what it subsidises the K-electric with Rs169 billion.

Iesco, for instance, stands out as a self-sufficient entity, generating a cross-subsidy of Rs112 billion, which comfortably covers its Rs44 billion subsidy requirement. Lesco follows suit, generating Rs201 billion as it needs Rs118 billion for subsidies, leaving them financially robust.

Fesco demonstrates similar financial independence, generating Rs91 billion while requiring Rs86 billion in subsidies.

In stark contrast, the other seven distribution companies (Discos) face financial deficits and depend on federal subsidies as well as inter-discos cross-subsidies from Iesco, Lesco and Fesco.

Moreover, the Peshawar Electric Supply Company (Pesco) generates only Rs42 billion in cross-subsidies against a subsidy requirement of Rs77 billion, resulting in a net required subsidy of Rs35 billion.

This financial gap is bridged by Rs17 billion from inter-Discos subsidy transfers and Rs18 billion from the federal government.

Similarly, the Gujranwala Electric Company (Gepco) receives Rs18 billion through inter-Discos subsidy transfers and another Rs18 billion from the federal government.

The Tribal Electric Supply Company (TESCO) requires Rs19 billion subsidy, which is met by Rs10 billion from inter-Discos subsidies and Rs9 billion from the federal government.

Furthermore, the Multan Electric Power Company (Mepco) also demonstrates a reliance on subsidies, needing Rs86 billion in total, with Rs43 billion coming from inter-Discos subsidies and Rs43 billion from the federal government while the Quetta Electric Supply Company (Qesco) has subsidy requirement of Rs44 billion, with Rs22 billion each provided by inter-Discos subsidies and the federal government.

The Sukkur Electric Supply Company (Secpco) requires Rs25 billion in subsidies, with Rs12 billion sourced from inter-Discos subsidy and Rs13 billion from the federal government.

Meanwhile, Hyderabad Electric Supply Company (Hesco) has a subsidy requirement of Rs69 billion, with the federal government contributing Rs35 billion and the remaining Rs34 billion coming from inter-Discos cross-subsidy.

KE’s response

In response to Langrial’s statement, the power utility has clarified that the amount of subsidy goes back to the government institutions against the purchase of costly fuel.

“If KE gets the 276 mmcfd gas as approved by the ECC there wouldn’t be a need for any subsidy. Instead of captive or low-efficiency plants, the gas should be given to K-Electric.”

Natural gas supply to KE is currently suspended, it added.

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Dar chairs the CCOP meeting; Blue World’s bid offer of Rs.10 billion is rejected.

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2 days ago

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The Foreign Minister/Deputy Prime Minister chaired the Cabinet Committee on Privatization meeting.

Other committee members who attended the conference included the Federal Secretaries of several Divisions, the Ministers of Finance and Revenue, Industry and Food, Commerce, Power, and Privatization.

The CCOP took the PC Board’s recommendation into consideration and suggested that Blue World’s bid of 10 billion rupees for the sale of 60% of PIACL’s shares be rejected. The bid was rejected by the CCOP, who chose to follow the PC Board’s advice.

The government’s determination to sell out PIACL through government-to-government or privatization was reaffirmed by the CCOP.

The CCOP was pleased with the Aviation Division’s evaluation of PIACL’s sound financial standing.

Additionally, the CCOP established a committee, chaired by the Minister of State for Finance, to assess potential transaction possibilities for the privatization of the Roosevelt Hotel and the appropriate modes of adoption in light of existing legal rules.

Prior to its subsequent meeting, the CCOP also ordered that all difficulties be resolved and an agreement for the selling of services to an international hotel be concluded.

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The KSE-100 Index has surged by 790 points, resulting in an all-time peak for the stock exchange.

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The benchmark KSE-100 Index increased by 790 points, marking a new all-time high for the Pakistan Stock Exchange (PSX) at 94,982 points.

The record-breaking performance underscores a surge of optimism and investor confidence in the stock market.

As investors responded to favorable economic signals, the market experienced a significant increase of over 500 points in early trading. Later, the KSE-100 Index reached another record level of 94,786 points after adding 594 points to its upward trajectory.

This positive development comes as the State Bank of Pakistan’s (SBP) foreign exchange reserves saw an increase of $84 million, reaching $11.26 billion during the week ending November 8, according to data released by the central bank on Thursday.

This represents an increase of 0.75% from the previous week. In addition, the nation’s total liquid foreign reserves experienced a modest increase, increasing by $33.7 million or 0.21% week-on-week to $15.97 billion.

In contrast, commercial banks’ reserves experienced a decline of $50.3 million or 1.06%, ultimately settling at $4.71 billion.

Furthermore, the economic team of Pakistan has expressed confidence in the discussions with the International Monetary Fund (IMF). Minister of State for Finance Ali Pervaiz Malik, in an exclusive conversation with Samaa TV, claimed talks were moving in a positive direction.

Highlighting improvements in Pakistan’s economic conditions, Malik noted substantial progress over the past six months to a year. He emphasized that Pakistan’s current economic situation has seen significant enhancement, with a reduced current account deficit of only $100 million in the first quarter, a reflection of the government’s strategy to increase remittances and boost exports.

Malik shared that discussions with the IMF are primarily focused on external financing, and while there have been speculations about a potential mini-budget or an increase in the petroleum levy, he clarified that these are currently premature considerations.

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Positive IMF negotiations propel KSE-100 Index above 94,000 points

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3 days ago

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As a result of investors’ optimism about the reported progress in the continuing talks with the International Monetary Fund (IMF), the Pakistan Stock Exchange (PSX) experienced a robust surge.

The benchmark KSE-100 Index of the PSX, which tracks market sentiment, rose 713 points to a new record high of 94,068 points, breaking above the 94,000-point barrier, as the trading session began.

Early in the day, the stock market began its upward trajectory as the KSE-100 Index steadily rose, gaining 574 points to reach 93,932 points. A possible agreement with the International Monetary Fund (IMF) might lead to more fiscal stability and back Pakistan’s economic reforms, which is why investors are so optimistic about the country’s future.

Officials from the Federal Board of Revenue (FBR) informed the International Monetary Fund (IMF) on Wednesday that the government would not be introducing a mini-budget and would instead continue to aim to collect Rs12,970 billion in taxes each year.

In line with continuing discussions with the Fund, FBR sources revealed that petroleum goods will not be subject to the General Sales Tax (GST).

The fact that Pakistan’s tax-to-GDP ratio has increased from 8.8% to 10.3%, a 1.5% gain viewed as a favorable sign of Pakistan’s fiscal policies, has reportedly pleased the IMF, who has voiced satisfaction at Pakistan’s recent economic performance.

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