ISLAMABAD: The federal government has significantly increased subsidies for the merged districts of former FATA in Khyber Pakhtunkhwa and enhanced food subsidies for the Gilgit-Baltistan region.
In the upcoming federal budget for 2024-25, Rs86 billion has been allocated for power subsidy arrears in erstwhile FATA, with an additional Rs65 billion set aside for power subsidies. This marks a notable increase from the Rs25 billion allocated in the outgoing fiscal year, of which Rs39 billion was disbursed.
Overall, the government has allocated Rs1.36 trillion in subsidies for the next fiscal year, up from Rs1.07 trillion in 2023-24. A significant portion, Rs1.19 trillion, is dedicated to the power sector, benefiting entities like the Water and Power Development Authority (Wapda), Pepco, and K-Electric (KE), compared to the Rs584 billion spent last year.
The budget outlines various power sector subsidies, including:
Rs276 billion for inter-disco tariff differentials
Rs108 billion for tariff differentials in Azad Jammu Kashmir (AJK)
Rs174 billion for tariff differentials to KE
Rs48 billion for Pepco
Rs500 million for tube well electricity subsidies in Balochistan
Additionally, Rs509 billion is allocated under various heads, including government power projects, AJK’s electric revenue shortfall, KE’s transmission and distribution losses, former FATA subsidy arrears, and other supplementary subsidies.
Petroleum subsidies amounting to Rs18.4 billion cover Pepco’s shortfall in guaranteed throughput, payments to Asia Petroleum, and subsidies to domestic consumers through Sui Northern Gas Pipelines Limited.
For agricultural support, Rs12 billion is allocated to the Pakistan Agricultural Storage and Services Corporation to maintain wheat reserves and cover sales cost differentials. However, subsidies for urea fertilizer production and supply have been reduced to Rs3 billion from Rs25 billion last year, while the Ramzan package grants to the Utility Stores Corporation total Rs65 billion.
Other key subsidies include:
Rs15.87 billion for wheat in Gilgit-Baltistan
Rs10 billion for urea import
Rs1 billion for Naya Pakistan Housing Authority
Rs21 billion for the Mera Pakistan Mera Ghar Scheme
Rs14 billion for phasing out State Bank refinancing facilities
Rs3 billion for Islamabad metro bus
Rs5 billion for the Kissan package mark-up subsidy
In terms of grants, Rs66 billion is allocated to the KP government for former FATA and Khasadars, and Rs47 billion to Sindh to offset octroi and zila tax abolition losses.
Other grants totaling Rs1.66 trillion include Rs270 billion for contingent liabilities, Rs132 billion for miscellaneous grants, Rs64 billion for railways, and Rs13 billion for relief.
The increased subsidies highlight the government’s focus on stabilizing the power sector and providing targeted support to key regions and sectors.
Story by Kalbe Ali
