The International Monetary Fund (IMF) has requested that Pakistan distribute Rs65 billion to power users, which was delayed in the form of Fuel Price Adjustments (FPA) at the height of the previous summer season.
The government and IMF decided that out of the entire amount of Rs65 billion that is still owed as a result of the deferral of FPA in energy rates for the current fiscal year, Rs 55 billion will be passed on to customers and recouped through bills. The allocation of subsidized funds will take care of the remaining Rs. 10 billion.
In a dire position, Pakistan’s cash-strapped electricity industry is hurtling towards bankruptcy as its total accumulated losses for the current fiscal year might reach Rs. 1,734 billion with the adoption of a status quo strategy. On the other hand, customers feel powerless since the phrase “reform” conjures up images of rising tariffs while, in reality, it leads to an increase in theft in this industry.
If no corrective action is done by the government, out of the total accumulated losses of Rs. 1,700 to Rs. 1,800 billion, there is a chance of a subsidy of Rs. 1,000 billion and a further Rs. 700 to Rs. 800 billion building up in the monster of circular debt.
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