Upto 24 percent hike in power tariff in three phases

[Naveed Yaseen]

MUSHTAQ GHUMMAN
ISLAMABAD (July 19 2009): The Ministry of Water and Power has formally announced an increase in power tariff up to 24 percent in three phases. The first phase is scheduled to commence on October 1, 2009. "Power tariff will be raised by 8-10 percent from October 1, 2009, followed by 5-6 percent from January 1, 2010, and by 5-6 percent from April, 2010," said Zarar Aslam, Additional Secretary-cum-spokesman of Water and Power Ministry, at an informal meeting here on Saturday.

He said that the government had intended to increase tariff by 17.5 percent but the teams of the World Bank and Asian Development Bank (ADB) calculated the resource gap of Rs 122 billion, out of which Rs 55 billion was targeted to be provided as power sector subsidy. Total billing of Pepco is about Rs 428 billion, annually.

According to him, the cost of power per unit is Rs 8.25, whereas the government is selling it at Rs 5.45. The government did not implement differential tariff mechanism due to political considerations, saying: "we will eventually move towards differential tariff".

Replying to a question, Zarar reiterated that there would be no load shedding after December, as per repeated announcements made by the Minister for Water and Power, Pervez Ashraf. But at the same time he expressed dismay over nonavailability of furnace oil meant for power generation.

Asked when Mangla dam would be fully operational, he said that it would be ready by July 26, one day later than earlier promised. "Out of 10 units, 2 units of 100 MW each are operational, and I hope the plant will be ready by July 26," he added.

He, however, admitted that the 40-year old wires should have been replaced two to three years earlier but there was negligence on the part of Wapda, which would be part of an inquiry. "Replacement of wires with local wires is a short-term measure, which would be later replaced with imported wire," he said.

Regarding privatisation of the power sector, he said that four discos--Fesco, Hesco, Pesco and Qesco--are on the list of those entities which would be privatised. These entities will be sold to local investors, because foreign investors are unlikely to enter the Pakistani market due to law and order situation. He said that financing arrangements for $11.5 billion 4500 MW Diamer Basha Dam has been made but land acquisition, demarcation and establishment of power houses are some of the key issues which are yet to be resolved.

According to him, ADB has agreed to provide $4-5 billion, IDB $1 billion, whereas other resources would be generated through suppliers' credit. ADB, however, has set the condition that a resolution in favour of the dam should be passed by the National Assembly.

He said that rental power plants are the last option as other hydel and IPPs projects take three to four years. Zarar said that Engro-led consortium would be allocated mining block within two to three months, and added that the World Bank would shortly approve a $30 million loan for Thar project.

http://www.thenews.com.pk/daily_detail.asp?id=188788