The Economic Coordination Committee (ECC) of the Cabinet has instructed the Ministry of Planning, Development, and Special Initiatives to surrender Rs 50 billion from the Public Sector Development Program (PSDP) to the Power Division, according to a news report.
This decision is aimed at meeting the subsidy requirements for the power sector and addressing circular debt targets set with the International Monetary Fund (IMF).
To achieve the revised circular debt flow target of Rs 337 billion by June 2025, the Power Division stressed the need to fully utilise the Rs 1.229 trillion budgeted for subsidies.
The ECC discussed proposals from the Power Division, including the Rs 50 billion reallocation from the PSDP for power subsidies and a TSG of Rs 24.5 billion for the solarisation project in Balochistan.
The reallocation of Rs 50 billion will help cover the additional tariff differential subsidy for the power sector. The committee noted that security issues in Balochistan had delayed the retrieval of materials for the solarisation project but assured that progress is ongoing. A third-party validation report is expected in the second week of May 2025.
The ECC approved the proposal and instructed the Power Division to update the committee on the project’s progress by July 2025. The Planning Division was also tasked with ensuring that the Rs 50 billion subsidy allocation is transferred to the Power Division, with necessary adjustments made in the budget by the Finance Division.
Following a briefing from the Power Division, the government reaffirmed its commitment to solarising agricultural tube wells in Balochistan. This initiative was discussed in a series of consultative meetings with provincial and federal government officials in 2024. On February 2, 2024, the Prime Minister approved the plan to solarise 27,000 agricultural tube wells in Balochistan, with compensation of up to Rs 2 million for each tube well with a legal electricity connection, subject to disconnection from the grid.
The estimated cost of the solarisation project is Rs 55 billion, with the federal government covering 70% and the provincial government covering 30%.
An agreement was signed on July 8, 2024, with the federal government allocating Rs 14 billion through a Technical Supplementary Grant (TSG) from the National Food Security and Research Division’s budget.
The remaining Rs 24.5 billion for the project is expected to come from an additional subsidy for the power sector, as proposed by the Finance Division.
