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Rs23b calamity budget diverted to AJK

Reallocation aimed to provide wheat, electricity subsidy to valley

ISLAMABAD:

The government on Wednesday approved diverting the Rs23 billion worth calamity and emergency budget to give subsidies on wheat and electricity to the consumers of Azad Jammu and Kashmir (AJK) aimed at protecting the “national interest”.

The government approved the supplementary grant of Rs23 billion a day after the International Monetary Fund (IMF) had also questioned the rationality of Pakistan’s decision to give additional subsidies, according to the sources.

The Economic Coordination Committee (ECC) of the Cabinet gave approval to the summary for provision of Rs23 billion as additional grants to the AJK government, according to a press statement issued by the Ministry of Finance after the meeting.

Read PM approves massive subsidies for AJK

The Ministry of Finance said that the additional grant has been given through technical supplementary grant as proposed by the Ministry of Kashmir Affairs and Gilgit-Baltistan. Finance Minister Muhammad Aurangzeb presided over the ECC meeting.

The secretary Kashmir Affairs and Gilgit-Baltistan briefed the ECC that during a high-level meeting held two days ago Prime Minister Shehbaz Sharif had authorized an additional grant of Rs23 Billion to the government of AJK, in the paramount national interest, the finance ministry said.

Also read AJK protests persist into third consecutive day

The premier approved the immediate provision of Rs23 billion to AJK after the region witnessed clashes and protests in the past few days.

The money will be used for giving subsidies for wheat and electricity.

Sources said that the funds have been allocated by diverting money from the pool designated for disaster and emergency purposes for this fiscal year.

They said that the ECC’s approval was necessitated due to an overall increase in the size of the grants that had been approved by the National Assembly for the current fiscal year.

Clashes erupted in the special region after the federal government increased the electricity prices in July. The regional government had reached an agreement with the protestors a few months ago but its implementation was pending.
The skirmishes resumed last week when traders and residential consumers blocked roads due to non-implementation of the agreement.

Finally, the prime minister announced a Rs23 billion subsidy to provide wheat at Rs2,000 per 40 kilogramme in AJK compared to Rs3,900 in Pakistan.

The electricity rates for the residential consumers were announced at Rs3 per unit for monthly consumption of 100 units, Rs5 per unit for consumption between 101 to 300 units, and Rs6 per unit for usage exceeding 500 units.

Sources revealed that Prime Minister Shehbaz Sharif has also directed the finance ministry to set aside the subsidy in the next budget for continuous provision of subsidized electricity and wheat for the region.

The finance ministry sources said that the IMF questioned the rationality of giving the subsidies. The Pakistani authorities maintained that the additional subsidies were provided in the national interest.

The prime minister has set up a committee comprising Finance Secretary Imdadullah Bosal, Kashmir Affairs secretary and AJK chief secretary.

The committee would work out the subsidy requirements for the next fiscal year 2024-25 and accordingly allocate the money in the new budget.

Where the government has approved additional subsidies for the consumers of the AJK, it is planning to increase the electricity prices for 250 million people of Pakistan.

A day earlier, the energy ministry informed the IMF that the average electricity tariff on account of yearly adjustment might be increased in the range of Rs5 to Rs7 per unit in July.

This Rs7 per unit increase would put an additional burden of Rs805 billion on the electricity consumers, excluding the impact of increased general sales tax.

In total, the electricity consumers would be forced to cough up nearly Rs1 trillion in additional bills on an annual basis. The Rs7 per unit increase will be in addition to increase in the bills on account of monthly and quarterly adjustments.
After the anticipated increase, the average per unit electricity price would jump to Rs37 per unit. But after the inclusion of various taxes, debt servicing charges, fuel price adjustment and the quarterly adjustment the price would jump to Rs70 per unit, the sources said.

The total estimated revenue requirements for the next fiscal year now exceed Rs4 trillion, with Rs2.2 trillion or Rs20 per unit, attributed to idle capacity payments, the sources added.

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