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Power tariff may go up by another 24pc |
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ISLAMABAD: The government has decided in principle to increase electricity tariff by another 24 per cent this year, introduce reformed general sales tax (GST) on Oct 1, and cut federal and provincial expenditures by up to Rs280 billion. A finance ministry official said the government would increase electricity tariff by eight per cent after every quarter, with the first hike taking effect from Sept 1. He said the International Monetary Fund (IMF) had estimated that a 49 per cent increase was required this year to bridge the power companies’ financing gap. The government had initially envisaged a 33 per cent increase. However, based on business plan of Pakistan Electric Power Company (Pepco), the government now believed that a 24 per cent tariff increase would be sufficient for the current year, with the remaining financing gap being bridged through recovery of arrears and reduction in system losses. Sources said the issue of inter-corporate circular debt had yet to be resolved because Sindh and Khyber Pakhtunkhwa governments had got stay orders from courts against at source deduction of electricity bills. The debt, the sources said, stood at around Rs115 billion, of which about Rs100 billion pertained to the provincial governments. If this amount was cleared, the requirement for tariff increase would come down to about 24 per cent. The official said that provincial governments had given an undertaking to the prime minister that they would curtail their non-salary expenditures this year “in the interest of national cause” in order to provide a saving of about Rs166 billion as envisaged under the federal budget. However, the federal government would also have to reduce its current expenditure, including security-related spending, and find some other avenues for savings. It was felt that the current deficit target of 4 per cent envisaged in the budget would have to be adhered to at all costs because the target approved by the parliament was sacrosanct and without this the IMF would not allow release of the next tranche of $1.7 billion. The official said the provincial governments had also agreed to the federal government’s request for an integrated and reformed GST, except for the tax on services like telecommunications and banking and insurance to be administered by the Sindh government. |
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ISLAMABAD:
31/07/2010 |
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