ISLAMABAD  – Amid to provide tariff deferential subsidy, the government is set to arrange additional borrowing of Rs 14 billion through Sukuk Bond for Pakistan Electric Power Company (Pepco) and Discos.

Official sources informed here on Sunday that in the first four months(July-Sep) of current financial year 2012-13 an amount of Rs 119 billion has been paid to the Pakistan Electric Power Company out of which Rs 85 billion was paid to Pakistan state oil (PSO).

The source said Ministry of Finance has released tariff differential subsidy of Rs 263.250 billion to Pepco up to October30, 2012 against verified claims of Tariff differential subsidy of July 2011 and partial claims in September 2012 amounting to Rs 259.008 billion.

The government has provided a total subsidy on electricity of Rs 1,409 billion has from financial year in last 6 years of which this amount included Rs 312.768 on account of Debt Swap undertaken during the current fiscal year.

During fiscal year 2006-7 an amount of Rs 58.872 billion were released for tariff differential subsidy, in 2007-8 Rs 133.360 billion,2008-9 Rs 109.170 billion and 2009-10 Rs.178.840 billion were paid to the Pakistan Electric Power Company (Pepco) for tariff differential subsidy.

Sources further revealed that during fiscal year 2010-2011, a sum of Rs 346.100 billion was provided to the Pepco for tariff differential subsidy to minimize the gap between power production and its sale whereas during last financial year 2011-12 an amount of Rs 464.020 billion was paid under tariff deferential subsidy.

The source also added that with the approval of ECC of the cabinet, funds of Rs.142 were raised from banks as loan in February 2012 and paid to the Independent power plants by Pepco.

Officials told that the government has been paying subsidy for not passing on full power generation cost to end consumers and was paying subsidy for tariff differential between generation and distribution cost.

According to the official, per unit was higher and average amount charged from the consumers was very low. The entire situation was leading to circular debt therefore the government has to reform the power sector to make it efficient in terms of distribution, collection and power generation to bring down the rising cost of subsidies.  The leakages have to be plugged and power theft has to be taken care of in the light of recently approved electricity and gas theft legislation by the parliament that proposed stringent punishment official added.