Islamabad-The government is likely to reduce subsidy of electricity consumers by Rs 50 billion and allow a top limit of Rs200 billion in the upcoming fiscal year. The finance division wants the Ministry of Energy (Power Division) to keep the subsidy to Power consumers within the range of Rs 200 billion, official source told The Nation here Tuesday.

The government is providing a subsidy of to lifeline consumers, who use less than or up to 300 units (kwh) per month and farmers in Balochistan. The consumers who are using up to 300 units per month account for 75 per cent of the total consumers. The subsidy is being provided through Distribution Companies (Discos) and K-Electric.

In the ongoing fiscal the government is providing Rs250 billion subsidy to various categories of Power consumers. Out of the total Rs 250 billion allocated in the budget 2019-20, Rs191 billion is being provided to Discos while Rs 59.5 billion is being provided through K-Electric consumers.

For the budget 2020-21 the Ministry of Energy has proposed a subsidy of Rs266 billion, however rejected the demand the Finance division has provided a ceiling of Rs200 billion, said the source.

Meanwhile another source said that the Power division has approached the finance division to get funds of Rs37 billion to off-set the impact of fewer recoveries.

The source said that due to COVID-19 pandemic the recoveries by Discos are too less and to pay to the IPPs they need this amount from the government. The source said that a summary in this regard will be forwarded to the Economic Coordination Committee (ECC) for approval.

The source said that the amount will be paid on the behalf of Discos to the Central Power Purchase Agency (CPPA).The CPPA will pay the amount to IPPs, the source added.

It is pertinent to mention here that in March, the federal government had deferred the payments of gas and electricity bills for three months owning to a countrywide lockdown in the country. The government has earmarked Rs100 billion to bear the effects of deferred payments of electricity and gas bills.