K-Electric gets highest ever federal subsidy of Rs 169 billion

A representative image of a K-electric bill.  -kei live
A representative image of a K-electric bill. -kei live
  • KE subsidies are being funded from the federal budget.
  • IISCO, LESCO and FESCO are giving subsidies to other DISCOs.
  • KE says that gas supply to captive power plants should be stopped.

ISLAMABAD: The federal government is providing the highest subsidy to K-Electric compared to state-run electricity distribution companies (DISCOs), it emerged on Wednesday.

According to data from the Ministry of Energy (Power Division), K-Electric’s net required subsidy is Rs 169 billion and is being met from the federal government budget.

Among the DISCOs, three are Islamabad Electric Supply Company (ISCO), Lahore Electric Supply Company (LESCO) and Faisalabad Electric Supply Company (FESCO), which are subsidizing the remaining seven DISCOs with a total amount of Rs 156 billion per year. Federal Secretary Power Division Rashid Mahmood Langriyal told The News.

Iesco’s share in the form of cross-subsidy given to other companies (except K-Electric) is Rs 68 billion, Lesco’s Rs 83 billion and Fesco’s Rs 5 billion.

All three do not need to take subsidies from the federal government.

Besides this, the federal government is also subsidizing consumers of other DISCOs with a combined subsidy amount of Rs 158 billion, which is a larger amount than the Rs 169 billion subsidy given to K-Electric.

For example, Iesco stands as a self-reliant entity, generating cross-subsidy of Rs 112 billion, which easily meets its subsidy requirement of Rs 44 billion. LESCO also followed suit and generated Rs 201 billion as it needs Rs 118 billion for subsidies, making them financially strong.

FESCO also displays similar financial independence, generating Rs 91 billion while requiring subsidies of Rs 86 billion.

In stark contrast, the other seven distribution companies (DISCOs) face financial losses and depend on federal subsidies as well as inter-DISCO cross-subsidies of ISECO, LESCO and FESCO.

Furthermore, Peshawar Electric Supply Company (PESCO) generates only Rs 42 billion in cross-subsidy against the subsidy requirement of Rs 77 billion, resulting in a net required subsidy of Rs 35 billion.

This financing gap has been filled by Rs 17 billion from inter-DICO subsidy transfers and Rs 18 billion from the federal government.

Similarly, Gujranwala Electric Company (GEPCO) gets Rs 18 billion through inter-DICO subsidy transfer and Rs 18 billion from the federal government.

Tribal Electric Supply Company (TESCO) requires a subsidy of Rs 19 billion, which is met by Rs 10 billion from inter-Disco subsidies and Rs 9 billion from the federal government.

Furthermore, Multan Electric Power Company (MEPCO) also exhibits dependence on subsidies, requiring a total of Rs 86 billion, of which Rs 43 billion comes from inter-DICO subsidies and Rs 43 billion from the federal government, while Quetta Electric Supply Company (Cusco) receives subsidy. A requirement of Rs 44 billion, which included inter-Disco subsidy and Rs 22 billion each provided by the federal government.

Sukkur Electric Supply Company (SECPCO) requires a subsidy of Rs 25 billion, of which Rs 12 billion comes from inter-disco subsidies and Rs 13 billion from the federal government.

Meanwhile, Hyderabad Electric Supply Company (HESCO) requires a subsidy of Rs 69 billion, of which the federal government contributes Rs 35 billion and the remaining Rs 34 billion comes from inter-disco cross-subsidy.

ke’s response

Responding to Langreale’s statement, the power utility has clarified that the amount of subsidy against the purchase of expensive fuel is returned to government institutions.

“If KE gets 276 mmcfd of gas approved by ECC then no subsidy will be required. Instead of captive or low efficiency plants, the gas should be given to K-Electric.”

It said the supply of natural gas to KE is currently suspended.

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