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MoF supports extension in subsidy on agriculture tubewell tariff

Finance Ministry has reportedly supported extension in subsidy on agriculture tubewell tariff to Balochistan with the condition of a reduction in GoP ratio from 40 to 30 per cent and an increase in GoB share to 70 per cent, well-informed sources in Finance Ministry told Business Recorder. In June 2015, the ECC had decided to continue a subsidy on agriculture tube wells for Balochistan till December 31, 2016 of which the share of federal government was to be 40 per cent. The period of subsidy expired last month.

The Economic Co-ordination Committee (ECC) of the Cabinet, which is scheduled to meet on Friday (today), is expected to consider the proposal. Explaining its position, Finance Division, stated that the recommendations of the committee constituted by the Cabinet Committee on Energy (CCoE) to review the agri tubewell subsidy in Balochistan on January 9, 2015, approved by the ECC on June 17,2015 have not been implemented in letter and spirit and a compliance report may be submitted to the ECC.

Finance Ministry, sources said, maintains that excess charges may be recovered from the respective agriculture consumers using load beyond 30 horse power electric motor and consuming electricity more than eight hours a day in addition to installation of ToD ToU meters.

According to sources, Finance Ministry has also proposed that solar system-powered tubewells may be encouraged in agriculture to eliminate the subsidy on this account. Finance Division, sources said, has made it clear that it would not have any liability to make payment of arrears of Rs 54.636 billion for the period for which subsidy was discontinued ie July 1, 2010 to November 30, 2012 unless approved by the competent forum, which would be subject to an audit by AGP.

ECC of the Cabinet on May 21, 2015 decided not to pass on negative FCA to lifeline consumers, domestic consumers (consuming upto 300 units) and agriculture consumers. In this connection, Qesco has retained Rs 18.08 billion till May 2015 as reported by Nepra, therefore, this amount may be adjusted against ATWS and in future the negative FCA impact, if any, may be adjusted in the respective monthly claim.

The sources further stated that Finance Ministry has proposed that the subsidy may be continued for a further one year instead of the proposed two years. This would help to make budgetary allocation accordingly. It has also recommended that the GoP sharing ratio may be reduced from 40 per cent to 30 per cent and Government of Balochistan share be increased to 70 per cent and upper ceiling of tube-well billing may be reduced to Rs 50,000 per month.

Citation: Ghumman,Mushtaq. MoF supports extension in subsidy on agriculture tubewell tariff. Business Recorder, January 6, 2017.

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