61% hike in power tariff in consideration

[Naveed Yaseen]

By Khalid Mustafa
ISLAMABAD: Another inflation bomb is ready to hit poor masses as the National Electric Power Regulatory Authority (NEPRA) has hinted at a massive increase of 61 per cent in electricity tariff of power distribution companies and the government is considering fully passing on the said rise to end-consumers, a senior official at the Ministry of Finance told The News.

Since March 2008, there has been no increase in power tariff despite the massive increase in prices of fuel used in thermal houses in the country. Fuel cost has gone out of control and there is a need of a hefty increase in power tariff.

Right now the Pakistan Electric Power Company (PEPCO) has been trapped in a logjam of huge fiscal constraints, as it has no money to pay various Independent Power Producers, which are threatening to shut down their power plants.

The IPPs have also threatened to encash government guarantees against dues which PEPCO is liable to pay. IPPs are also facing the music, as they are running short of liquidity and are unable to pay oil marketing companies for the fuel they used to run their power plants.

The circular debt has reached unmanageable levels. So the massive increase in power tariff is inevitable to bail out PEPCO from its huge fiscal trap.

However, the official said that NEPRA is still busy in finalising its most frightening determination to this effect. NEPRA has hinted at a 61 per cent increase in power tariff to the Ministry of Finance in its preliminary calculations.

When contacted, a senior official at the Ministry of Water and Power said that by the end of the current month the ministry will receive much-awaited tariff determination. After consulting the top man at the Ministry of Finance, a formal notification for increase in power tariff would be issued.

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Daily Time reports
By Sajid Chaudhry

ISLAMABAD: The National Electric Power Regulatory Authority (NEPRA) has proposed an increase of up to 61 percent in the power tariff to meet the electricity production cost, official sources said on Friday.

The sources said the government would not increase tariff to the suggested extent, adding that a three-fold increase in the price of furnace oil was responsible for the likely hike before Ramazan.

They said that although NEPRA had recommended an immediate increase the government would only pass around 30 percent increase on to consumers.

The power tariff increase will also help resolve the circular debt issue causing difficulties for independent power producers (IPPs) and the Pakistan State Oil.

According to the sources, the Pakistan Electric Power Company (PEPCO) needs to reduce line losses and recover dues from defaulters - which run into billions of rupees - in order to improve its finances.

They said PEPCO had paid Rs 23 billion out of Rs 53 billion it owed to IPPs, adding that the IPPs had threatened to stop power production if their dues were not cleared.

They said the IPPs were producing 1,000 megawatts less electricity this year due to the unpaid debt.


http://www.dailytimes.com.pk/default.asp...2008_pg7_3