The Punjab government’s “fiscally irresponsible” decision to provide power subsidies worth between Rs45 and Rs90 billion for a two-month period has resulted in Pakistan being hit with a barrage of new demands by the International Monetary Fund (IMF) concerning energy subsidies and provincial budgets.
The Punjab administration received at least three critical-nature conditions from the global lender after the state provided a two-month power subsidy of Rs. 14 per unit, according to media reports.
Additionally, the IMF requested that this short-term subsidy terminate by September 30 and stated clearly that no province government would provide a fresh subsidy of this kind during the 37-month Extended Fund Facility (EEF) program.
The new requirements might put Punjab’s plan to spend Rs. 700 billion on solar panels for customers with monthly usage of up to 500 at risk.
“The provinces pledge that they are not going to implement any subsidy for electricity or gas,” the IMF recently introduced as one of the conditions.
The requirements also cast doubt on Prime Minister Shehbaz Sharif’s remarks, which had urged the other three provinces to follow suit, and contradict the assertions made by the provincial administrations that they are able to provide power subsidies.
The majority of residential users can no longer afford power due to poor administration, increased line losses, higher taxes, charging consumers over 300 units per month in subsidies, and costly packages.
Prices for residential and business customers have increased to between Rs64 and Rs76 per unit as a result of these reasons.
However, the Punjab provincial administration and the federal government came up with a two-month subsidy scheme instead of coming up with a long-term solution.
The Punjab government authorized the Rs14 per unit discount for power bills in August and September for users of 201–500 units in the state and Islamabad.
According to reports, the chief minister of Punjab stated that the subsidy would cost Rs45 billion, but the provincial finance minister claimed that the real cost was Rs90 billion.
