No cheap electricity: Govt to increase power tariff to phase out subsidy

Published: August 1, 2013

Government will increase the tariff for industrial and commercial consumers from August 1, and for domestic consumers using over 200 units per month from October 1, says Minister for Water & Power. PHOTO: PID

ISLAMABAD: 

The government has decided to raise the power tariff for industrial, commercial and domestic consumers to phase out subsidy, Minister for Water and Power Khawaja Asif announced on Wednesday.

Addressing a news conference, Asif said the government would increase the tariff for industrial and commercial consumers from August 1, and for domestic consumers using over 200 units per month from October 1. While he didn’t disclose the exact hike in the tariff, he said it would range between 30% and 70%. Consumers, as such, would face an increase by Rs3 to Rs6 per unit, depending on which category they fall in, he added.

“There has been no adjustment in power tariff for the last 14 months and the government is forced to pay Rs480 billion to clear circular debt. We now want to raise power tariff to avoid circular debt and phase out subsidy … the government will face circular debt worth Rs600 billion to Rs700 billion next year if the power tariff is not increased,” Asif added.

He, however, said the government would protect those consumers who couldn’t afford the increase in tariff and used only 200 units per month.

The minister also unveiled the five-year energy policy, which the Council of Common Interest (CCI) approved in its meeting on Wednesday.

He said the government was also working out a plan with the provinces to regulate the markets. He added that the government would legislate to close markets at the same time across the country in the evening to save 1,200 megawatts of electricity. The government was expected to complete the distribution of six million energy savers by December this year that would save 700MW.

He said the government would also continue efforts to reduce load-shedding. “Power production reached a historical level of 16,170MW on Tuesday,” he said, adding that the government would try to produce 15,000MW on average. According to him, the shortfall stands at 3,200MW against the 5,000MW before the PML-N government came into power.

“Power theft amounts to Rs120 billion to Rs200 billion per annum … The government is going to make power and gas theft an un-bailable offence with huge penalties,” the minister said, adding that the government would also set up utility courts to take action against the consumers involved in power and gas pilferage. The cases of big power defaulters would be handed over to the Federal Investigation Agency.

Asif informed journalists that the issue of adjuster to settle power dues with the provinces had not been finalised yet. The boards of directors of the power firms have been dissolved and new chiefs would be appointed soon.

The minister said talks with India were under way to import electricity. “However, power import is not possible unless it installs the system,” he added. For Balochistan, meanwhile, an arrangement would be made to import electricity from Iran.

He said the thrust of the new energy policy was to rationalise the energy mix by focusing on power generation through coal instead of fuel. Under the new policy, the government has also decided to increase the gas prices for all users except domestic consumers. Gas consumption in the CNG sector would also be reduced to divert it to the power sector.

An official of the ministry of water and power said that the government was considering a plan to give guarantees to industrial consumers for an uninterrupted power supply after the hike in tariff.

Earlier Prime Minister Nawaz Sharif congratulated the CCI members for reaching consensus on a matter of utmost importance.

“I wholeheartedly congratulate the provinces for evolving the consensus, but the responsibility still rests with the provinces to ensure implementation of the energy policy,” he said after the meeting approved the new energy policy.

“We respect the mandate of all the provincial governments and would support them in their endeavours for the welfare of the people,” he added.

The prime minister stressed the need to learn from each other’s experiences and expertise. “Each province should share its success with other provinces so that it can be replicated,” he added.

Published in The Express Tribune, August 1st, 2013.

Reader Comments (21)

  • jibran
    Aug 1, 2013 - 2:56AM

    PMLN will never tax the rich, but will milk the poor badly. It will peel off every ounce of meat from the bones of the poor.

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  • Suprised
    Aug 1, 2013 - 3:36AM

    The confusing number game of MWatts, Subsidies and billions of circular debt etc – End loosers are poor masses.

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  • Sonya
    Aug 1, 2013 - 3:39AM

    If you think Peoples Party’s Government was bad – wait till PML N completes first 100 days ! No wonder why Nawaz Sharif is shying away from speaking to the nation.

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  • pappu
    Aug 1, 2013 - 3:46AM

    ET…did you really think that electricity was cheap in Pakistan…or is this is another way of making ground for this unethical and illegitimate hike according to the IMF orders to government..

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  • Comment Bott
    Aug 1, 2013 - 4:47AM

    A’ala Hazrat. What about those who have multilpe meters on their premises?

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  • A Pakistani
    Aug 1, 2013 - 4:57AM

    The increase in power tariffs is a belated, long due step. It is a common sense that if you produce a unit of electricity at Rs18 per unit and sell it at Rs9 per unit, you cannot sustain and end up in a circular debt thus choking the entire system.
    The circular debt popped up in 2007 when Musharraf’s government deliberately kept the prices lower despite the fact that international oil prices had shot up to US$147 per barrel since it was then an election year. The circular debt of Rs 70 billion in 2008 rose to the level of more than whopping Rs500 billion in 2013.
    It is very important to rationalise the tariff if you want to provide a service on sustainable basis.

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  • tung
    Aug 1, 2013 - 5:04AM

    A well thought out plan.we are making expensive electricity and we have to pay up for it.as soon as we shift to coal I think we would be able to lower the tarrif. Moreover the bulk of the consumer uses less than 300 so definitely it woudnt have an effect on them. Im starting to like this govt.

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  • Toba Alu
    Aug 1, 2013 - 5:32AM

    Finally, a policy that makes sense. The targeted subsidies for the poor should be more than recovered from the richer consumers. The more affluent consumers have benefitted the most from the past wrong policies. Now enforce the law. Heavy fines and mandatory prison sentences. Monthly bills to be corrected for replacement costs fuel.

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  • YP
    Aug 1, 2013 - 5:44AM

    Its PML (N) and PPP governments, who invited IPP using fuel oil to produce expensive electricity and also agreed to their (IPP’s) terms and now we have to pay for their blunders.

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  • Dark Knight
    Aug 1, 2013 - 6:34AM

    6Rs/unit hike. Why don’t they just directly strangle us…

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  • Sajjad Ashraf
    Aug 1, 2013 - 7:36AM

    Good part of the problem is the theft of electricity and non-payment of bills. The worst offenders are big players and various government departments.

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  • vaqas
    Aug 1, 2013 - 8:21AM

    Here is an idea. Why not just make the price per unit 100 rs. That way no one will use electricity except the extremely rich and we will have surplus electricity in a matter of days. Hurrah! Problem solved. Long live nawaz sharif!

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  • akhtar
    Aug 1, 2013 - 8:42AM

    What is this subsidy which is withdrawn whenever the price is to be increased. It could be once twice or thrice but not every quarter or at the whim of the govt. If they the rulers have to increase rates to fleece the people they come with this idea may it be electricity. fertiliser or fuel (petrol or diesel) etc . I ask one simple question how every time the subsidy enters the pricing system and than is to be removed? This jugglery must end now and good sense should prevail on rulers which seems to be a remote possibility. NS and his cronies or repeating their previous doing and I feel may not survive long. the fact is well known to them so they want to grab maximum financial resource like raja rental , geelani and of course our honourable president.

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  • Khan
    Aug 1, 2013 - 8:51AM

    The poor man doesn’t have several AC units running in his house. People can’t read the article as it says that the price hike will be for those who use 200 or more units of electricity.

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  • Saud Usmani
    Aug 1, 2013 - 9:08AM

    @Khan:
    What about people consuming 250 or let say 300 units???

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  • Xnain
    Aug 1, 2013 - 9:15AM

    @A Pakistani:
    Actually the comments of most of the reader do reflect their negligence to underlying facts. The subsidy has been retained uptil 200 units and these are enough for an average middle class family’s whole month (Given they don’t use ACs). Poor masses usually stay below 100 Units. Now if the people with ACs are being counted as “poor masses” here, then probably World Bank should change their definitions of poverty.

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  • PIARA
    Aug 1, 2013 - 9:22AM

    Wow….blessings in this Ramazan have been countless so far for the muslim umma…subhan allah…electricity and petrol hikes are the toppings in the last ashra.

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  • Imran Hayat
    Aug 1, 2013 - 9:54AM

    wait for the day we will receive electricity bill under new tariff

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  • Muhammad Akbar
    Aug 1, 2013 - 2:06PM

    @jibran:
    when one consumes more than 200 units then how can you say that he is a poor. its a good step. may be that 200 could be made 250 but still 200 units is enough for daily needs. come out and see the world to know whats minimum and whats excessive.

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  • Jawad Zafar
    Aug 1, 2013 - 2:23PM

    If Government is able to stop Electricity Theft by Commercial and Industrial Users, I can bet that Domestic Users can Enjoy Free Electricity… but the problem is that government will never handle the BIG parties with Iron hands, because nearly all of them are Like Brothers of the Rulers, as the Rulers are also Industrialists :)

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  • Xnain
    Aug 2, 2013 - 12:23AM

    @Jawad Zafar:
    Theoretically that’s not possible, since with theft, the surcharges go up. But even if the government is able to fully control the theft, the underlying fact that average generation cost of electricity is 14 Rs would not change. which would mean a loss of 6Rs per unit would still be borne by the government.

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