Discos allowed 60 percent power tariff hike

[Naveed Yaseen]

MUSHTAQ GHUMMAN
ISLAMABAD (August 24 2008): After receiving green signal from Prime Minister Yousuf Raza Gilani, the government controlled National Electric Power Regulatory Authority (Nepra) has allowed the Discos to increase their tariffs by 60 percent, except lifeline consumers.

In June, Pepco had sought a rise of only 21 percent in consumer-end tariff, along with advance payment of subsidies budgeted for 2008-09 and automatic fuel adjustment on monthly basis. The revised tariff determination was received by the Ministry of Water and Power on Saturday which has started preparing final sketch of the new tariff after inclusion of GST and other taxes prior to issuing the notification.

Those most affected among domestic consumers would be who use is above 700 units. Their tariff would be nearly Rs 13 per unit, followed by consumers using 1-700 units who would have to pay Rs 11 per unit. Tariff for the domestic consumers who are consuming up to 300 units would be around Rs 8 per unit, whereas those consumers who use just 100 units would have to pay Rs 5 per unit.

Tariff for sanctioned load up to 5 kW commercial consumers would be around Rs 15 per unit and for sanctioned load exceeding 5 kW would be around Rs 12 per unit. There is some difference in tariff for all categories of consumers, except lifeline consumers.

The raise in tariff, said to be the highest ever, would hit every segment of society, especially the poor, as the prices of essentials would rise as a consequence of the higher tariff. "Yes, we have received revised tariff determinations from Nepra, and are finalising the notification to seek approval of the Law Ministry, which is mandatory before the publication of the notification," said an official of the Ministry of Water and Power. The much-awaited new tariff would be notified on Monday or Tuesday, and would be applicable immediately.

Sources said that 16 percent raise has already been passed on to the consumers with the withdrawal of GST exemption. All Discos have been asked to submit their calculations for adjustment in average sale rate due to variation in power purchase price billed by Central Power Purchase Authority according to the prescribed transfer price mechanism by 15th of next month immediately after the period as laid down in the prescribed mechanism.

The regulator will determine the revised tariff within 5 working days of receipt of information from the concerned Disco. The variation in average sale rate will be identified between the various consumer classes such that cross-subsidisation is minimised as far as possible. This adjustment will not be applicable to lifeline consumers.

The new tariff will not only force the people to avoid unnecessary use of electricity but would also save up to 1000 mw power, which would mean the country could save foreign exchange which is being wasted on import of furnace oil, said another official.

In June, the Finance Ministry had briefed the Cabinet that power tariff would touch Rs 10 per unit after upward revision. However, Secretary, Water and Power, was of the view that lower income levels would be protected. "It would be a hefty increase, targeted to remove Pepco's growing financial difficulties," Naveed said.

Pepco, in its letter to the federal government had stated that the power sector was suffering from very serious financial crunch and that was why they were unable to pay overdue amounts of independent power producers (IPPs). The primary reasons for the persistent financial crisis were said to be insufficient tariff to cover the legitimate cost of providing electricity and overdue payment from FATA and KESC.

Sources said that Pepco has to pay Rs 175 billion to IPPs, of which Rs 105 billion is outstanding (as component of the circular debt) whereas Rs 70 billion is overdue. Sources said that Pepco had urged the federal government to take immediate steps to avoid complete financial collapse of the power sector.

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