Interprovincial Differences in Power Sector Subsidies and Implications for the NFC Award
Power sector subsidies constituted 83 percent of the federal government’s total subsidies of PRs 558 billion in 2012; the tariff differential subsidy (TDS) amounted to PRs 457 billion. TDS is provided to distribution companies (DISCOs) to cover the difference between the NEPRA-approved tariff schedules and the uniform tariff schedule (by consumer group) set by the Ministry of Water and Power for all regions of the country. The tariff approved by NEPRA takes account of all components of DISCOs’ costs, including salaries, overheads, depreciation and maintenance, line losses, return on assets and so on. These cost elements differ across DISCOs. The fact that NEPRA approves different per-unit tariffs while the Ministry of Water and Power sets a uniform tariff (by consumer group) across all DISCOs implies that each DISCO receives a different per-unit TDS (by consumer group) from the federal government. The TDS to individual DISCOs can be aggregated to calculate provincial shares in the total power sector subsidy. This paper outlines the electricity tariff determination process; reports on the TDS by consumer group, DISCO and province; and considers the likely changes in the federal/provincial shares of the divisible pool of tax revenue if TDS were given to the provinces in the form of a revenue share from the divisible pool. We find that residential consumers are the highest recipients of TDS and that it is distributed unequally among the DISCOs. Moreover, TDS is distributed unequally among the four provinces and the distribution is not in line with the shares determined under the 7th National Finance Commission Award.
Volume (Year): 52 (2013)
Issue (Month): 4 ()
|Contact details of provider:|| Postal: P.O.Box 1091, Islamabad-44000|
Web page: http://www.pide.org.pk
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:pid:journl:v:52:y:2013:i:4:p:421-436. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Khurram Iqbal)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.