Latest news with #Rs1.18
Express Tribune
11-06-2025
- Business
- Express Tribune
Subsidies trimmed by Rs180b to Rs1.18tr
The Power Division has urged Nepra to align KE's tariff structure with national standards to ensure fairness, transparency and affordability. photo: file Listen to article The government has slashed the allocation for subsidies to Rs1.18 trillion for the upcoming fiscal year 2025-26, of which Rs1.036 trillion will go to the power sector. The government had earlier allocated Rs1.36 trillion in subsidies for the power sector and other commodities, which went up to Rs1.378 trillion for the ongoing financial year, according to revised estimates. With the subsidy allocation for FY26, the government expects to provide some relief for consumers of electricity, petroleum, food, urea, wheat subsidy, and mark-up for low-cost housing. However, it remains uncertain whether the government will be able to stay within the subsidy ceiling or exceed the target, as happened in the outgoing year. According to the Budget Book released on Tuesday, the subsidy bill has been estimated at Rs1.186 trillion for the next fiscal year, a reduction compared to the current financial year's allocation. Out of the total subsidies, a major chunk worth Rs1.03 trillion will go to the power sector compared to Rs1.19 trillion for the ongoing financial year. For the next fiscal year, the government has earmarked Rs249 billion — down from Rs276 billion — for payments for Inter-Disco tariff differential. An amount of Rs40 billion has been set aside for the merged districts of Khyber-Pakhtunkhwa (K-P including Federally Administered Tribal Areas (FATA) subsidy), compared to Rs65 billion allocated during the outgoing fiscal year for FATA subsidy arrears. The government has also set aside Rs74 billion for the next financial year — down from Rs108 billion — for the tariff differential for Azad Jammu and Kashmir (AJK). An amount of Rs48 billion has been earmarked for the Pakistan Energy Revolving Fund (PERA), the same as the ongoing financial year. The subsidy allocation to cover K-Electric's (KE) tariff differential has been slashed to Rs125 billion for the next fiscal year, compared to Rs171 billion allocated during the outgoing financial year. However, the government has increased the allocation to Rs1 billion for agriculture tubewells in Balochistan for KE consumers, up from Rs500 million during the outgoing year. Of the total, the government has allocated Rs95 billion for payments to Independent Power Producers (IPPs) for the next fiscal year. No allocation was originally made for IPPs in the outgoing year, but later Rs115 billion was provided in the revised budget estimates. The government has also allocated a Rs1.2 billion subsidy for petroleum for the next fiscal year, down from Rs18.4 billion. An amount of Rs1.2 billion has been earmarked to meet the shortfall in guaranteed throughput of Pakistan Electric Power Company (PEPCO), down from Rs2.4 billion this year. An allocation of Rs6 billion was also made during the outgoing fiscal year to cover the shortfall of Asia Petroleum; however, no such allocation has been made for the next year. For the ongoing fiscal year, the government had allocated Rs10 billion for domestic consumers through Sui Northern Gas Pipelines Limited (SNGPL), but no allocation has been made for this purpose in FY26. The subsidy cushion for the Pakistan Agricultural Storage and Services Corporation (PASSCO) has been increased to Rs20 billion from Rs12 billion for the current year. Of this, Rs14 billion will go for wheat reserve stocks and Rs6 billion for the cost differential in the sale of wheat. The government has slashed the subsidy allocation to Rs24 billion for the next fiscal year from Rs68 billion for industries and production. Of this, Rs9 billion will go as incentives for electric vehicles (EVs), and Rs15 billion to clear Utility Stores Corporation of Pakistan (USCP) sugar subsidy arrears. No allocation has been made for the Ramazan Package or USCP PM Package. However, the government has increased the allocation to Rs104 billion for 'other subsidies' against Rs75 billion allocated earlier, which rose to Rs90 billion in revised estimates this year. Of this, Rs20 billion will go for wheat subsidies in Gilgit-Baltistan (G-B), and Rs15 billion for imported urea fertiliser. The Naya Pakistan Housing Authority will get Rs1 billion, with an additional Rs7 billion for the mark-up subsidy and risk-sharing scheme for, farm mechanisation, under the Kissan Package. The government will release Rs1 billion for the refinance and credit guarantee scheme (SME Asaan Finance), while Rs5.4 billion has been allocated for SME sector financing enhancement. An allocation of Rs30 billion — up from Rs13 billion — has been made for the mark-up subsidy supporting the phase-out of SBP refinancing facilities. Further allocations include Rs3 billion for 5km radius gas schemes, Rs5 billion for the EFS Enhanced Plan-Exim and Related Scheme, Rs5 billion for housing sector subsidies, and Rs7.3 billion for the Metro Bus subsidy.
Express Tribune
02-06-2025
- Business
- Express Tribune
Murree hikes public toilet fees amid financial crisis
Facing a severe financial crisis, the Murree Municipal Corporation has increased public toilet usage fees across the hill station. The charge has risen from Rs20 to Rs50 per person. Parking fees for vehicles and charges at the local slaughterhouse have also been increased. These service contracts will be auctioned off to private contractors on June 12. Despite the fee hikes, there is no guarantee of basic amenities like water, soap, or towels in the washrooms. According to the chief officer of the municipal corporation, seven major public toilets are located along key tourist routes and picnic points. The minimum collective bid for these washroom contracts is set at Rs1.18. Among them, three are in high-traffic areas such as Pindi Point, Kashmir Point, and the General Bus Stand, with a combined contract value of Rs0.92. Four others in less frequented areas like Guldana, Lower Topa, and Jhika Gali have a total value of Rs0.25. Contractors will be authorised to charge visitors Rs50 per use. At the Murree slaughterhouse, new taxes have been introduced. Rs100 has been fixed for a small animal and Rs200 per large animal, with the slaughterhouse contract sold for Rs0.29.
Express Tribune
14-05-2025
- Business
- Express Tribune
PM's approval sought for increasing oil margins
Listen to article The Petroleum Division has sought the endorsement of Prime Minister Shahbaz Sharif for increasing profit margins of oil marketing companies (OMCs) and dealers and settling the losses of refineries. Sources said that the Petroleum Division had tabled a summary before the Economic Coordination Committee (ECC), seeking an increase of Rs1.18 per litre in margins for the OMCs and dealers. It also sought approval for the recovery of financial losses of oil refineries and OMCs amounting to Rs34 billion due to sales tax exemption on petroleum products. It proposed that the oil industry should be allowed to charge Rs1.87 per litre through the inland freight equalisation margin (IFEM) to recover the losses of Rs34 billion. The third proposal was that the government should impose a 5% general sales tax (GST) on petroleum products in the upcoming budget for fiscal year 2025-26 to shield the oil industry from losses in the wake of sales tax exemption. Sources said that the ECC had agreed to those proposals, but sought the consent of the prime minister. They said that the first two proposals should be implemented immediately, while the third, pertaining to the imposition of sales tax, was linked to the International Monetary Fund (IMF). Therefore, the government may implement it in the upcoming budget. The ECC was informed that petroleum products – motor gasoline (Mogas), high-speed diesel (HSD), kerosene and light diesel oil (LDO) – had been classified as "exempted" under the Finance Act 2024. As a result, the input sales tax has become a cost incurred by the refineries and OMCs (estimated at Rs34 billion for financial year 2024-25) and it cannot be recovered through product prices, as these are regulated and fixed by the Oil and Gas Regulatory Authority (Ogra) under the government's policy. A draft proposal to levy 3-5% sales tax on motor spirit (MS) and HSD had been prepared in consultation with the oil industry, Finance Division and Federal Board of Revenue (FBR). However, it could not be implemented due to the IMF's refusal to allow the reduced GST on those products. It may be noted that the standard GST rate of 18% for MS/HSD will result in a price increase of around Rs45 per litre, which is not desirable. Any changes in the sales tax rate will require prior consultation with the IMF as well as approval from parliament. Additionally, the OMCs and petroleum dealers have requested an increase in their margins on MS and HSD. In this regard, Ogra has recommended an increase of Rs1.13 and Rs1.40 per litre, respectively, to ensure the sustainability of oil supply chain. Ogra's recommendations have been reviewed and certain amendments have been suggested in the summary. To partially address the financial issues of refineries, OMCs and dealers, the following proposals have been submitted for consideration: The Petroleum Division said that since petroleum products (Mogas, diesel, kerosene and LDO) were exempt from sales tax during the current financial year, the unadjusted sales tax for refineries and OMCs from July 2024 to June 2025 on those products may be compensated through the IFEM (estimated at Rs34 billion). The amount may be recovered over 12 months. It was further highlighted that for FY26, a 3-5% sales tax on the aforementioned products may be imposed through the Finance Act. However, in case these products remain exempt from sales tax, the unadjusted sales tax may continue to be compensated through the IFEM as a fallback option to keep the oil supply chain sustainable. The margins of OMCs and petroleum dealers may be enhanced to maintain their business viability. The Petroleum Division said that Ogra would develop a mechanism for the adjustment of GST claims for the above period and ensure effective utilisation of digitisation costs, along with implementation timelines, within one month of approval. The full cost of digitisation will be borne by the OMCs throughout the oil supply chain, including at outlets.
Business Recorder
13-05-2025
- Business
- Business Recorder
Power tariffs: Summer relief extends
The summer season of massive relief continues for electricity consumers, as another Rs1.55/unit cut in lieu of Quarterly Tariff Adjustment (QTA) has been notified by the regulator. The QTA for 3QFY25 will be in field for May, June and July QTA for May and June will be in addition to the 2QFY25 QTA amounting to Rs1.9/unit – that is already in place till June 2025. The combined relief over March 2025 now stands at Rs6.2/unit for protected category slabs, and nearly Rs5/unit for unprotected. The impact includes negative monthly fuel charges adjustment of Rs1.18/per unit, of which Rs0.9 is the temporary adjustment that will last another month. The standalone monthly FCA at Rs0.28/unit for May 2025 is the lowest since September 2024, as deviations with reference generation have increased of late – largely owing to reduced hydrology and increased reliance on RLNG. The tariff composition has a number of temporary relief heads when compared with March 2025. This is what is in field. Tariff Differential subsidy (TDS) of Rs1.71/unit for April-June, 2QFY25 QTA of negative Rs1.9/unit for Apr-Jun, 3QFY25 QTA of negative Rs1.55/unit for May-July, FCA retention relief of negative Rs0.9/unit for Apr-Jun, and Rs0.28/unit on account of monthly FCA for May 2025. The base tariff, surcharges, duties, and taxes, meanwhile, have remained unchanged. From a year ago, the tariff respite is rather considerable, ranging from 9 percent to 48 percent across various slabs. Effective tariffs are down Rs8/unit for protected and nearly Rs6/unit for unprotected consumers year-on-year. Interestingly, the effective tariff for the non-lifeline protected consumer in the lowest category is now lower than the lifeline consumer's highest slab. The difference is marginal, and temporary – as non-lifeline consumers do not get the benefit of periodic adjustments, which have been rather significant of late. Nearly half of the capacity charges reduction for 3QFY25 stemmed from the impact of termination of 5 plants, and renegotiated terms with a number of IPPs. A considerable portion owes to the impact of closure of Neelum Jhelum power plant – which may have led to some savings on account of capacity charges but is a net negative for the sector – as no contribution will lead to a visibly altered reference generation mix for the next annual tariff rebasing exercise. Early signs indicate FY26 base tariffs will be a tad lower or at pat with FY25, and periodic adjustments are expected to be much lower, given the impact of IPP negotiations and terminated contracts will likely be built in the revised Power Purchase Price (PPP) for FY26. All eyes are now on the hydel flows which will be key in keeping power tariffs within close proximity of base tariffs for FY26.
