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Pakistan Discontine Kissan Package Subsidy for Agriculture Consumers

BUSINESS: The coalition government has ended the power subsidy that was provided to consumers in agriculture as part of the conditions imposed by the International Monetary Fund (IMF) in order to unlock funding totaling more than $1 billion.

In response to the unprecedented flash floods that  later reported by the National Electric Power Regulatory Authority (NEPRA) in December of last year,
Prime Minister Shehbaz Sharif made an announcement about a Kissan Package for farmers in October 2022.

However, due to the terms stipulated by the Washington-based lender, the government has suspended the package immediately after providing it for two months.

The Power Division’s announcement read, “Federal Cabinet […] has approved the Discontinuation of Kissan Package
for base rate relief of Rs3.60/kWh to private agriculture consumers beginning on March 1, 2023.”

It state that the federal cabinet’s decision had  communicated for immediate implementation and necessary action.

Also Read :Pakistan Weekly Inflation Surges To 41.54% After Revival Of IMF Programme

Due to the catastrophic flooding brought on by historic monsoon rains, the premier announced a relief package for growers. The flooding destroyed roads, crops,
infrastructure, and bridges, killing over 1,700 people and affecting more than 33 million, or 15% of the country’s 220 million people.

The NEPRA had reduced the power tariff by Rs3.60 per unit to the then-base rate of Rs16.80 in conjunction with the announcement.
Following this, farmers were consuming electricity at the base rate of Rs13.

However, agriculture customers will now have to pay Rs16.60 in base rate as a result of the facility’s discontinuation.

The federal cabinet is anticipated to receive Rs14 billion  June as a result of the decision.
It is important to note that the Power Division has sent letters to K-Electric and other distribution companies in this regard.

Through letters written in this regard, the division has also informed the Ministry of Finance and the Ministry of Food and Agriculture.

The IMF has taken four previous steps, including imposing a permanent power surcharge of Rs3.39 per unit plus 0.43 paisa (Rs3.82 per unit).
Adopting a market-based exchange rate, increasing the discount rate by 150 to 250 basis points,
And obtaining confirmation from bilateral partners to fill a $7 billion external financing gap.

Concerning the power surcharge, Pakistan argued that the EFF program would end in June 2023, explaining how the IMF could demand a Rs3.82 per unit permanent surcharge.