Power consumers paid Rs400b in capacity charges
Pay amount to IPPs despite no electricity generation
PHOTO: REUTERS
ISLAMABAD:
Honest power consumers have paid Rs400 billion to independent power producers (IPPs) during the current Pakistan Tehreek-e-Insaf (PTI) government’s tenure despite no addition of electricity to the national grid, blamed on faulty agreements inked by the previous government.
According to government officials, the PTI administration has increased power tariff by Rs5.32 per unit to clear the backlog left by the previous Pakistan Muslim League-Nawaz (PML-N) government.
As per agreements signed with the IPPs, consumers are required to pay capacity charges to the power plants if they remain idle and the government does not add electricity to the national grid. These power plants remain closed either due to being lower on the economic merit order or thin demand in the country. However, consumers have still to pay the capacity charges.
The cost of electricity had gone up and new electricity generation capacity had been added to the national grid. However, the previous government prevented tariff changes for almost three years starting 2015.
Capacity additions, exchange rate variations, resultant capacity payment variations, positive fuel cost adjustments and net hydel profit remained untreated till 2018 and were not passed on to consumers.
The previous government had not budgeted unpaid subsidies amounted to Rs127 billion. This also included an industrial support package. The resultant tariff increase of Rs5.32 per unit to clear the entire backlog was inevitable.
The tariff determinations since September 2018 reflected additions to the electricity generation capacity, exchange rate of PKR/USD 105 vs 155, treatment of previously untreated capacity payments (Rs226 billion, in addition to Rs180 billion, and net hydel profit of Rs146 billion).
The present tariff also included a subsidised slab of domestic consumers up to 300 units (single phase).
At present, the average consumer electricity tariff including income taxes and surcharges stands at Rs18.65 per unit, which included Rs4 per unit on account of taxes, duties and surcharges.
However, there are several electricity tariffs determined by the power regulator, which are due to be notified by the government. If all pending tariffs are notified, the electricity tariff will rise to Rs24.47 per unit against the existing Rs18.65 per unit, sources told The Express Tribune.
They said the National Electric Power Regulatory Authority (Nepra) had determined a tariff increase of Rs1.61 per unit, which was due to be passed on to consumers in the second quarter of the current year.
On the other hand, a tariff hike of Rs2.44 per unit on account of fuel cost adjustment for December 2019 and another Rs1.76 per unit for January 2020 is also due.
Published in The Express Tribune, March 7th, 2020.
Honest power consumers have paid Rs400 billion to independent power producers (IPPs) during the current Pakistan Tehreek-e-Insaf (PTI) government’s tenure despite no addition of electricity to the national grid, blamed on faulty agreements inked by the previous government.
According to government officials, the PTI administration has increased power tariff by Rs5.32 per unit to clear the backlog left by the previous Pakistan Muslim League-Nawaz (PML-N) government.
As per agreements signed with the IPPs, consumers are required to pay capacity charges to the power plants if they remain idle and the government does not add electricity to the national grid. These power plants remain closed either due to being lower on the economic merit order or thin demand in the country. However, consumers have still to pay the capacity charges.
The cost of electricity had gone up and new electricity generation capacity had been added to the national grid. However, the previous government prevented tariff changes for almost three years starting 2015.
Capacity additions, exchange rate variations, resultant capacity payment variations, positive fuel cost adjustments and net hydel profit remained untreated till 2018 and were not passed on to consumers.
The previous government had not budgeted unpaid subsidies amounted to Rs127 billion. This also included an industrial support package. The resultant tariff increase of Rs5.32 per unit to clear the entire backlog was inevitable.
The tariff determinations since September 2018 reflected additions to the electricity generation capacity, exchange rate of PKR/USD 105 vs 155, treatment of previously untreated capacity payments (Rs226 billion, in addition to Rs180 billion, and net hydel profit of Rs146 billion).
The present tariff also included a subsidised slab of domestic consumers up to 300 units (single phase).
At present, the average consumer electricity tariff including income taxes and surcharges stands at Rs18.65 per unit, which included Rs4 per unit on account of taxes, duties and surcharges.
However, there are several electricity tariffs determined by the power regulator, which are due to be notified by the government. If all pending tariffs are notified, the electricity tariff will rise to Rs24.47 per unit against the existing Rs18.65 per unit, sources told The Express Tribune.
They said the National Electric Power Regulatory Authority (Nepra) had determined a tariff increase of Rs1.61 per unit, which was due to be passed on to consumers in the second quarter of the current year.
On the other hand, a tariff hike of Rs2.44 per unit on account of fuel cost adjustment for December 2019 and another Rs1.76 per unit for January 2020 is also due.
Published in The Express Tribune, March 7th, 2020.