Govt raises power tariff by two per cent

The move comes just before key IMF meeting.

ISLAMABAD/KARACHI:

The government increased power tariff on Friday by two per cent, reducing the subsidy in power sector before Pakistani delegation leaves for Dubai to hold talks with the International Monetary Fund (IMF).

The increase will not affect lifeline consumers.

A senior official of the ministry of water and power said that the hike will mainly affect people consuming between 101 and 301 units. However, it will be treated as a ‘surcharge’ on bill with over 301 units per month.

The government has already increased fuel prices by 11.8 per cent to discourage subsidies.

The current power tariff hike, to be effective from April 15, is in addition to Re1 per unit increase allowed by the National Electric Power Regulatory Authority (Nepra) to power distribution companies in fuel adjustment surcharge.

Officials of the power ministry said that the government was still required to increase power tariff by 16 per cent to recover full costs and end a Rs144 billion subsidy.

The government estimated that the power tariff hike will help it save Rs1.2 billion. The current increase is part of the government’s plan to increase power tariff by as much as six per cent to reduce subsidy in power sector.

A similar increase was implemented on March 15.

The remaining hike in power tariff in this account will be implemented in June, an official said, adding that the total impact of these hikes will be Rs3.6 billion.

Over the past three years, the government has increased power tariff by more than 80 per cent.

Under a programme to reform the power sector, the dissolution process of Pakistan Electric Power Company (Pepco) is still under way, which is expected to be completed in August this year. The board of directors of Power Distribution Companies (Discos) has already been changed.

The ministry of finance has recently injected Rs120 billion to clear the circular debt that has negatively affected Pakistan State Oil (PSO), oil refineries, Oil and Gas Development Company Limited (OGDC) and independent power plants.

The Karachi Electricity Supply Company (KESC) has been allowed to increase its electricity tariff two per cent with immediate effect. A notification has been issued by the ministry of water and power in this regard.

Published in The Express Tribune, May 7^th, 2011.