Hike aimed at generating additional revenue of Rs53.52b over next 12 months. PHOTO: REUTERS
The tariff hike - the third in the past nine months - was aimed at meeting a condition of the International Monetary Fund (IMF). However, this time the government also passed its responsibility of giving subsidies to the consumers of less than 300 units on to those whose monthly consumption was above 300 units.
Against the National Electric Power Regulatory Authority (Nepra)-determined increase of 53 paisa per unit for all types of consumers, the Economic Coordination Committee (ECC) of the cabinet approved a hike of 83 paisa per unit for the consumers using more than 300 units a month.
The additional increase of 30 paisa per unit has been forced on the consumers that use over 300 units aimed at recovering an additional Rs27 billion from them on account of subsidies that consumers in the low-consumption category will avail.
“The total impact of 83-paisa-per-unit increase is about Rs80 billion,” an official of the Power Division told The Express Tribune.
“The ECC, in order to fully protect the lifeline and domestic consumers consuming up to 300 units, approved the additional charge of Rs0.30 per unit so that the impact of instant adjustment was not passed on to the lifeline and domestic consumers and at the same time the consolidated revenue requirement, approved and determined by Nepra on 27-9-2019, was maintained,” according to a statement issued by the finance ministry after the ECC meeting.
The tariff has been increased with effect from October 1. It is for the third time that the PTI government has increased the electricity tariff. Earlier, it raised base tariffs first on January 1 and then on June 14. All three increases were aimed at meeting the IMF condition.
The June 14 price increase was on account of quarterly adjustments for July-December 2018 period. However, the government again sought further increase in electricity prices on account of third and fourth quarters (January-June 2019) of previous fiscal year, which Nepra approved on September 27.
The constant increase in electricity tariffs has not only fuelled inflation but has also increased the cost of doing business, nullifying the positive impact of currency devaluation for the export-oriented industries.
The ECC constituted a committee for reviewing the proposal of recovering Rs24 billion from domestic consumers and giving it in subsidies to the industrial consumers. The committee will finalise its recommendations this week.
The ECC approved a proposal for the release of 150,000 tons of wheat to the provincial government of Khyber-Pakhtunkhwa (K-P) as well as release of 100,000 tons for Sindh, subject to the release of same quantity of wheat by the provinces from their own stocks.
The ECC agreed to bear 50% transportation and storage cost and allowed over Rs1 billion in subsidies. The remaining 50% cost will be borne by the provinces.
It is for the first time that the federal government will release its wheat stocks to meet requirements of the provinces. This time, Sindh did not procure wheat due to financing constraints.
The ECC was informed that the wheat supply situation was critical in K-P. The finance adviser directed the food ministry to give a briefing to the cabinet about the latest wheat situation in the country. Wheat stocks stood at 7.1 million tons, down by over one-third when compared with last year.
The ECC also approved a set of proposals submitted by the Ministry of Energy for the resolution of issues pertaining to 1,124-megawatt Kohala hydroelectric power project, including the minimum ecological water flow of 42 cumecs by maintaining the e-flow of 30 cumecs and releasing additional flow of 12 cumecs from the spillway, construction of sewage treatment plants and water bodies whose cost would be included in Nepra’s tariff.
The ECC discussed the issue regarding the Cabinet Committee on Energy’s “Approval of the Settlement of Liquidated Damages”, as referred to it by the cabinet, and constituted a committee comprising Economic Affairs Minister Hammad Azhar, Adviser to Prime Minister on Institutional Reforms and Austerity Ishrat Husain and Special Secretary Finance Omar Hamid Khan to examine the matter and submit its recommendations to the ECC.
The ECC’s approval was sought to waive liquidated damages of billions of rupees of a particular independent power producer.
Regarding another proposal from the Ministry of Energy, the ECC amended its decision of August 28, 2019 to allow proposed subsidy by the Sindh government in favour of destitute residents of Islamkot for reflection in electricity bills of 4,514 consumers of the area. The Sindh government would make budgetary provision for the proposed subsidy on an annual basis for the life of the facility, failing which the facility would be discontinued.
The ECC approved a proposal of the Ministry of Energy that allowed the Central Power Purchasing Agency to approach Nepra for the approval of extension in the tariff, as agreed between Pakistan and Iran on March 15, 2019 for the supply of power to the Makran Division from Power Generation and Transmission Management Company (Tavanir).
The ECC approved a technical supplementary grant of Rs419.154 million for paying the court fee and fee to the foreign counsel in the case of Dr Hilal Hussain Al-Tuwairiqi and Al-Ittifaq Steel Products Company vs the Islamic Republic of Pakistan.
Published in The Express Tribune, October 3rd, 2019.
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