Business

K-Electric gets highest federal subsidy of Rs169bn

Published

1 year ago

Farwa

KE subsidy is being fulfilled by federal budget.
Iesco, Lesco and Fesco subsiding other Discos.
KE says gas supply to captive power plants be stopped.

ISLAMABAD: The federal government is providing the highest subsidy to K-Electric as compared to the state-run Power Distribution Companies (Discos), it emerged Wednesday.

According to the Ministry of Energy (Power Division) statistics, the net required subsidy of K-Electric is Rs169 billion and is being fulfilled by the federal government budget.

Among the Discos, three are Islamabad Electric Supply Company (Iesco), Lahore Electric Supply Company (Lesco) and Faisalabad Electric Supply Company (Fesco), which are subsidising the remaining seven Discos with a total amount of Rs156 billion per annum, Federal Secretary of Power Division Rashid Mahmood Langrial told The News.

The share of Iesco is Rs68 billion, Lesco Rs83 billion and Fesco Rs5 billion as cross-subsidising the other companies (except K-Electric).

The three do not need to take subsidies from the federal government.

Besides, the federal government is also subsidising the consumers of other Discos with a combined subsidy amount of Rs158 billion, a bigger amount than what it subsidises the K-electric with Rs169 billion.

Iesco, for instance, stands out as a self-sufficient entity, generating a cross-subsidy of Rs112 billion, which comfortably covers its Rs44 billion subsidy requirement. Lesco follows suit, generating Rs201 billion as it needs Rs118 billion for subsidies, leaving them financially robust.

Fesco demonstrates similar financial independence, generating Rs91 billion while requiring Rs86 billion in subsidies.

In stark contrast, the other seven distribution companies (Discos) face financial deficits and depend on federal subsidies as well as inter-discos cross-subsidies from Iesco, Lesco and Fesco.

Moreover, the Peshawar Electric Supply Company (Pesco) generates only Rs42 billion in cross-subsidies against a subsidy requirement of Rs77 billion, resulting in a net required subsidy of Rs35 billion.

This financial gap is bridged by Rs17 billion from inter-Discos subsidy transfers and Rs18 billion from the federal government.

Similarly, the Gujranwala Electric Company (Gepco) receives Rs18 billion through inter-Discos subsidy transfers and another Rs18 billion from the federal government.

The Tribal Electric Supply Company (TESCO) requires Rs19 billion subsidy, which is met by Rs10 billion from inter-Discos subsidies and Rs9 billion from the federal government.

Furthermore, the Multan Electric Power Company (Mepco) also demonstrates a reliance on subsidies, needing Rs86 billion in total, with Rs43 billion coming from inter-Discos subsidies and Rs43 billion from the federal government while the Quetta Electric Supply Company (Qesco) has subsidy requirement of Rs44 billion, with Rs22 billion each provided by inter-Discos subsidies and the federal government.

The Sukkur Electric Supply Company (Secpco) requires Rs25 billion in subsidies, with Rs12 billion sourced from inter-Discos subsidy and Rs13 billion from the federal government.

Meanwhile, Hyderabad Electric Supply Company (Hesco) has a subsidy requirement of Rs69 billion, with the federal government contributing Rs35 billion and the remaining Rs34 billion coming from inter-Discos cross-subsidy.

KE’s response

In response to Langrial’s statement, the power utility has clarified that the amount of subsidy goes back to the government institutions against the purchase of costly fuel.

“If KE gets the 276 mmcfd gas as approved by the ECC there wouldn’t be a need for any subsidy. Instead of captive or low-efficiency plants, the gas should be given to K-Electric.”

Natural gas supply to KE is currently suspended, it added.

Business

SFD and Pakistan Sign Two Deals Totaling $1.61BLN

Published

2 days ago

Farwa

Two agreements totaling $1.61 billion have been inked by Pakistan and the Saudi Fund for Development to improve their bilateral economic cooperation.

Business

Saudi Arabia and Pakistan sign an MOU to strengthen their auditing industry collaboration.

Published

2 days ago

Farwa

A spokesperson for the office of the Auditor-General of Pakistan (AGP) announced on Monday that the two countries have signed a Memorandum of Understanding (MoU) to strengthen cooperation in public sector auditing through improved cooperation between audit institutions of both countries, as well as training programs and the exchange of trainers.

This comes as a group from Saudi Arabia’s General Court of Audit (GCA), headed by GCA President Dr. Hussam bin Abdulmohsen Alangari, arrived in Pakistan on Sunday for a four-day visit.

The agreement was signed during AGP Muhammad Ajmal Gondal’s meeting with the Saudi delegates, aiming to strengthen audit cooperation, enhance knowledge-sharing, and improve governance, transparency and accountability in government spending.

Public relations officer Muhammad Raza Irfan of the AGP’s office told Arab News that the deal will further advance bilateral collaboration between Saudi Arabia and Pakistan in addition to enhancing professional ties between the two nations’ auditing institutions.

In a statement released from his office, AGP Gondal was cited as saying, “This collaboration marks a significant step toward fostering international cooperation in auditing.”

“The exchange of ideas and methodologies will undoubtedly strengthen our capacity to meet emerging challenges and set new benchmarks for public accountability.”

Discussions at Monday’s meeting focused on fostering closer ties between the Supreme Audit Institutions (SAIs) of Pakistan and Saudi Arabia, sharing innovative audit methodologies, and planning collaborative initiatives for the future, according to the AGP office.

The two parties decided to increase their knowledge of theme, environmental, and impact audits as well as to exchange best practices in audit standards, performance audits, and citizen participation audits.

The statement added, “It also agreed to exchange trainers, address new auditing challenges, plan cooperative audits, including a performance audit on the oil and gas sector in 2025, and work together on training programs.”

Both sides reaffirmed their shared commitment to promoting transparency, accountability and excellence in public sector auditing.

Business

The government chooses to continue the PIA privatization process.

Published

2 days ago

Farwa

The Pakistan International Airlines (PIA) privatization process will be restarted by the federal government, and expressions of interest would be requested within the month. Officials stated that the Prime Minister’s Committee on Privatization will convene to make the final decision.

Usman Bajwa, the secretary of the Privatization Commission, gave a briefing on the updated procedure to the National Assembly Standing Committee on Privatization. Additionally, he disclosed that airlines other than PIA are now able to compete with regional carriers thanks to IMF-approved aircraft tax concessions.

Farooq Sattar, the chairman of the privatization committee, underlined the importance of giving PIA workers at least five years of job security. Employee protection will continue to be a top priority and will be resolved prior to bidding, the Privatization Commission promised.

PIA’s liabilities totaling Rs650 billion have already been assumed by the government, and an additional Rs45 billion in outstanding debts must be paid before the privatization process can begin. As of the now, PIA has assets around Rs155 billion and liabilities worth Rs200 billion. It will be necessary for the new buyer to expand the fleet by 15 to 20 aircraft.

Additionally, the Privatization Committee has sought a timeline for the privatization of Faisalabad, Gujranwala, and Islamabad Electric Supply Companies. Officials stated that after the appointment of a financial advisor, the privatization process for these companies will accelerate.