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WASHINGTON: The International Monetary Fund places Pakistan among the countries that spend 4 to 8 per cent of their GDP on providing energy subsidies.
In a report, the IMF estimates that Pakistan would be spending a total of $10.15 billion on energy subsidies during the current fiscal year. The biggest proportion of this, $7.40 billion, would be spent on natural gas, $1.35 billion on petroleum and $1.40 billion on coal.
However, the IMF also noted that the country was “implementing plans to reduce costly and inefficient electricity subsidies … while boosting support for the most vulnerable”.
Take a look: Power sector subsidy reduced by Rs250bn
It said the government had taken steps for “rationalising energy subsidies by 0.4pc of GDP”.
A planned tariff adjustment will reduce the electricity subsidies to 0.3pc of GDP in fiscal 2015-16 from around 0.8pc in the current year and will lower power sector arrears by 0.1pc of GDP.
But the report warned that “increased volatility in oil prices could affect efforts to reform energy subsidies”.
Published in Dawn, July 27th, 2015
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Comments (19) Closed
Jul 27, 2015 07:09am
What energy? There is none.
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Jul 27, 2015 07:18am
This is nothing more than jugglery of numbers. taxes are increased on utilities without reducing subsidies. This way the government keeps on complaining that it is giving subsidies. However, if these were netted off against various taxes and surcharges that the government imposes people in Pakistan are receiving no real subsidies.
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Jul 27, 2015 08:32am
Be prepared to pay more for the non-existent electricity.
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Jul 27, 2015 09:47am
Why does the IMF need to inform Pakistan of this? Energy subsidies need to be increased to 8 to 16% of the budget starting with providing energy to households for both heating and electricity.
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Jul 27, 2015 10:06am
Comparing to other countries this is huge. Average international standards is 2.5%
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Jul 27, 2015 10:37am
@Cyrus ...because we survive off IMF's funds. Stop taking funds from them and make your own decisions, otherwise get dictated. Simple, right?
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Jul 27, 2015 12:41pm
@Blue Saffron You mean a country of 185 million people is running without any energy?
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Jul 27, 2015 12:58pm
Pakistani consumers are already paying double the price of electricity compared to Bangladesh and most parts of India, and still if there are subsidies, it is not due to the consumers not paying, it is due to mis-management and corruption mafia sitting in these departments which are all controlled directly by the government ministries, and even the regulators are their own people, workign to please their political bosses instead of following the law...!!!
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Jul 27, 2015 01:52pm
It's not just IMF. All analysts agree gas is being unnecessarily subsidized for the industrial sector. That's the real problem.
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Jul 27, 2015 02:35pm
Rental power plants is cause of all this shame in power sector of Pak...Big fish are making money in a out of proportional way.
Like previous govt this govt is also clueless in tackling power generation. For them per unit charge of Rs 40 from Nandipur is ok but declined and Rs 8 per unit charge from a hydl power plant in Swat because of rivaly with PTI this govt is creating hurdle in PTI initiative of green growth that include 356 small hydro power plants.
Nelam Jehlum project sees record high cost, Metro world most expensive metropolitan transport and many more. Such a huge expert they have n looting Pak through commission and corruption.
God Save pak from these so called experience political crooks...
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Jul 27, 2015 02:56pm
No they are not....they say they are spending it on subsidy but it appears this too is a scam and they are looting this as well.
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Jul 27, 2015 03:21pm
Electricity is secondary form of energy. If our leadership misled by corrupt bureaucracy produces electricity from the costliest source in the world, that is petroleum, instead of some cheap indigenous source such as river-dams and coal, then our electricity prices have to be one of the highest in the world. It is not the fault of the people of Pakistan, it is the venality of the policy makers and the people should not be punished with high electricity prices. It is therefore necessary to give subsidy on electricity, and the IMF's minions are to be blamed for this and not the common man of Pakistan. Electricity subsidies are a sine qua non for Pakistan.
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Jul 27, 2015 03:45pm
In Pakisthan parlance energy subsidy means compensation for power theft, corruption and looting....
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Jul 27, 2015 03:49pm
Can anyone tell these IMF that we are payment more then 25% Tax including double paid Income tax to our Government and our beloved Govt charge us late surcharges also which is not available anywhere in the world.
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Jul 27, 2015 05:11pm
Forget all this, we need to focus on Kashmir issue only.
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Jul 27, 2015 10:47pm
I think they are subsidizing broken transformers and electrical lines . People hardly get any electricity. Instead proving billions of subsidies investing in effective and efficient power plants will be better. Our government thinks subsidies is the best way to control every issue..
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Jul 28, 2015 02:08am
The subsidies are awarded due corrupt practices. If a hydle unit of electricity costing Rs 3-5 is replaced by Furnace Oil of Rs. 15-18 the Govt has to provide a subsidy of Rs 4-8, so the IPPs (rulers their freinds & families) sells it at Rs 20.
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Jul 28, 2015 02:46am
wow thats massive
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Jul 28, 2015 09:14am
Only if Pmln government agrees yo help kpk government in producing cheap electricity via hydel projects, a lot of our problems will be solved. Also the dams constructed in the process will be used for irrigation and could help reduce floods.
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