South Asian Business news and information

Under the new budget, government would provide Rs 80 billion-100 billion to the electricity consumers and Rs 150 billion to the oil consumers. Due to fuel price hike, the subsidy may increase by Rs 130 bilion -140 billion in the power sector.

Daily Times reports:

They said that Power Distribution Companies (DISCOs) have filed a petition with the National Electric Power Regulatory Authority seeking an increase of 35 percent in the power tariff due to the hike in oil prices. The increase sought by the DISCOs would be implemented by July 1, 2008, they added.

In the 2007-08 budget, the government had notified a 10 percent increase in the power tariff. The government is expected to pass on a similar increase this year, while bearing the remaining amount in the form of subsidy.

Pakistan government is now trying hard to reduce the gap between general sales tax on petroleum products and margin of the Oil Marketing Companies (OMC) to stabilize oil prices in the country. It had already paid Rs 150 billion price differential claims to the OMCs and the pending claims would likely to increase to Rs 100 bilion by June 15. To reduce its subsidy burden, Pakistan government is planning to stop subsidies on diesel by the end of 2008. 

It is the government subsidy that has allowed the people of South Asian countries like Bangladesh, Nepal, Pakistan, India to buy petroleum products at lower prices. However, with the rising price of fuel, such subsidy is becoming a major burden on the part of the government. Already, rising fuel price have caused serious crisis in India. Finding no other ways, Indian government has increased the price of fuel. If necessary steps are not taken now, this can result into more serious crisis in future.

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