The whole subsidy package for utility stores was decreased by 56%.
A subsidy worth Rs10.8 billion has been approved by the government in order to make critical items more affordable to customers.
ISLAMABAD: The government on Tuesday authorised a dramatically reduced subsidy package of Rs10.8 billion, or a 56% reduction, for the sale of less expensive kitchen items at utility stores, even though prices went up.
According to a decision of the Economic Coordination Committee (ECC) of the cabinet, rates for the remaining consumers purchasing wheat flour, sugar, cooking oil, rice, and pulses from the government stores will increase by 63% while prices and subsidies will remain unchanged for only 400,000 targeted consumers.
A subsidy of Rs6.2 billion will be provided to the targeted consumers out of the cost of Rs10.8 billion, and Rs4.5 billion would be provided to the other users through June of the following year.
With effect from November 15, the ECC granted a subsidy for the Utility Stores Corporation (USC) of Rs1.65 billion per month, down from Rs3.8 billion. This implies that the monthly subsidy, or Rs2.1 billion, has been reduced by more than 56%.
Separately, the ECC approved the continuous distribution of wheat flour at a reduced price to Khyber-(K-P) Pakhtunkhwa’s rural areas, which would have cost an additional Rs1.6 billion from November to June of the next year.
At the current level of subsidies, the government has saved Rs13.7 billion for the remainder of the current fiscal year.
The PML-N-led coalition government has offered a subsidy of Rs100 billion to wealthy exporters who own private planes, despite cutting the subsidy for the poorest by Rs13.7 billion. This was accomplished by accepting a very expensive foreign loan. However, the exporters haven’t delivered.
In June, the federal cabinet gave permission to extend the subsidies on five necessities until the ECC made a decision. In the budget, the government set aside Rs 12 billion for subsidies, but in the first 45 days of FY23, Rs 16.9 billion has already been spent on the PM’s gift and the delivery of subsidised flour in K-P.
The ECC was given two options, the first of which would cost Rs10.8 billion in taxes and the second of which would cost Rs12.4 billion. The ECC chose the subsidy with the lowest price.
The government presently offers wheat flour through the utility stores at Rs 40 per kg by offering a subsidy of Rs 42 per kg on a blend of domestic and imported wheat. The lowest 400,000 consumers would continue to pay the current rate, it was decided.
However, the cost of wheat flour jumped by Rs25 per kg, or 63%, for the vast majority of consumers. The new cost of flour per kilogramme would be Rs65.
The price of sugar for the protected lowest consumers will stay at Rs70 per kg at the utility retailers with a subsidy of Rs21. The unprotected, however, would pay Rs80 per kg, an increase of Rs10 or 14%, it was determined.
Similarly to that, ghee and cooking oil are being offered for Rs300 per kilogramme with an Rs114 subsidy. The subsidy had been cut by Rs 89 per kg for consumers who weren’t covered by protection, which would result in a 30% increase in ghee prices.
The ECC chose to maintain the quota for each family of the 400,000 customers, but it reduced the quota for wheat flour by 50% and the quota for sugar and ghee by 40% for unprotected people.
The judgement states that the CNIC is used to determine the percentage of consumers who are not protected.
The ECC also authorised the transfer of Rs1.3 billion for SSGC to supply gas to the shuttered Pakistan Steel Mills (PSM). Since 2015, PSM has stopped producing steel.
However, PSM receives 2 million cubic feet per day (mmcfd) of low-flame gas on a monthly average basis at a cost of Rs 80 million in order to maintain the coke oven batteries and refractory kilns.
From October to December 2022, the Fatima Fertilizer and Agritech Limited plants were permitted to operate on subsidised RLNG at a cost to the national coffers of roughly Rs16 billion in subsidies, higher than the budgeted amount.
It had already authorised a discounted RLNG price for the plants of Rs839 per mmbtu. During the previous fiscal year, the government received a subsidy of Rs 33 billion under the head.
