The Ministry of Finance has taken over power sector reforms from the Ministry of Water and Power, as Finance Minister Dr Abdul Hafeez Shaikh and Planning Commission Deputy Chairman Dr Nadeemul Haque are said to be of the opinion that the concerned ministry lacked the ability and will to carry out reforms in the desired manner.
An official source said Prime Minister Yousaf Raza Gilani had to intervene to resolve the issue as the inter-ministerial committee on energy issues was not able to achieve consensus on many issues that resulted in delay in the finalisation of recommendations. “As all the ministers have co-equal status in the committee they were able not ready to accept each other’s argument and finalise recommendations.” The ministerial committee was to finalise recommendation on October 4, which were to be submitted for the approval of a special cabinet meeting attended by the provincial chief ministers.
However, the scheduled meeting could not be held as some technical matters needed more time for resolution, the source said, adding that the government wanted to complete the process before the arrival of the International Monetary Fund mission in November. He said the finance minister and Haque had serious reservation over the agriculture power tariff, as it had a share of 15.5 percent in the overall power consumption. During a recent meeting, it was mentioned to the Ministry of Water and Power that there was a discrepancy of Rs 10 billion in the agriculture tariff, which it assured would be removed, but no progress was made.
The source said the ministerial committee was clearly divided as the finance minister and PC DC were on one side and Minister for Power Syed Naveed Qamar was on the other. The Ministry of Water and Power was of the opinion that the discrepancy of Rs 10 billion was a minor one and would be rectified. But the finance team noted that the Ministry of Water and Power was not even aware of the exact amount for the agriculture tariff, as complete villages were utilising tubewell power supply for their use.
The Ministry of Water and Power estimated that 3.4 percent of consumers use up to 50 units per month, 8.9 percent up to 100 units, 22.03 percent up to 300 units, 6.2 percent up to 700 units and 3.9 percent above 700 units per month. It estimated that commercial consumers used 7.8 percent, industrial units 26.2 percent, bulk users 3.3 percent, while agriculture sector used 15.5 percent.
Based on these estimates, the ministry calculated that consumers using up to 50 units per month were being charged Rs 1.83 per kWh with a subsidy of Rs 8.61 per kWh, translating into an annual subsidy of Rs 22.4 billion. Users using up to 100 units per month were billed at Rs 4.28 per kWh, with a subsidy of Rs 6.16 per kWh that incurred an annual subsidy of Rs 41.9 billion. Consumers of up to 300 units were charged Rs 11.25 per kWh, with a subsidy of Rs 3.97 kWh that resulted in an annual subsidy of Rs 6.1 billion.
Users of up to 700 units were billed between Rs 13.75 and Rs 16.26 per kWh and were given no subsidy, while consumers using above 701 units were charged between Rs 15.5 and Rs 17.85 per kWh and were provided a subsidy of Rs 2.59 per kWh, resulting in an annual subsidy of Rs 7.06 billion. The finance minister’s argument was that tube-well users consumed more than 700 units and the Ministry of Water and Power had no estimate, which could derail power sector reforms.
