He confirmed that the power tariff “increase is inevitable” in January as it was one of the major conditions laid by the International Monetary Fund (IMF) for the revival of $6 billion aid programme and the need of the power sector.
The premier’s aide disclosed it on Friday in a talk show on Express News, The Review.
Hours after the federal government jacked up POL prices for a second time in a month, the SAPM apprised that power tariff would also be increased in January, saying Prime Minister Imran Khan was likely to announce the hike formally.
In December 2019, it was reported the premier gave a go-ahead to increase electricity prices whereby they were expected to go up by 25% or Rs3.34 per unit on account of annual base tariff increase of the previous fiscal year.
However, Gohar revealed the prices would go up by Rs1.95 per unit – roughly 16 to 17 per cent.
On January 14, a press conference of federal ministers was planned to explain the rationale behind the tariff increase. But the presser was called off on the last minute to avoid coincidence with an increase in petroleum prices due on Friday.
Commenting on a nationwide electricity breakdown that plunged the entire country into darkness and triggered a high alert on January 9, Gohar said it was a governance failure. “A blackout happens almost every two to four years. For me it is a governance failure,” the premier’s aide told the programme hosts, Kamran Yousaf and Shahbaz Rana.
The SAPM maintained the initial report concluded that the blackout was a result of “human error” but nothing could be said until the final report was released.
While commenting on a story appeared in the paper suggesting the government was going to give a National Reconciliation Ordinance (NRO) to the Independent Power Producers (IPPs) and changes were being made in an MoU to favour them, Gohar denied the reports, saying “there is no question of giving an NRO” to IPPs.
According to reports, the IPP inquiry report on the power sector recommended recovery of all excess payments amounting to over Rs1,000 billion. However, the federal government signed an MoU with the IPPs that offered payment of Rs450 billion to 47 IPPs. To which experts and officials commented that it was equivalent to giving an NRO to the IPPs.
The committee report had identified excess operations and maintenance expenses charged by the IPPs in the past but the MoU ignored excess charges in the past and negotiated to share future savings.
During the discussion in the programme, Gohar said that an arbitration tribunal would examine whether the IPPs were liable to return Rs53 billion on account of alleged payments made to them, adding that the tribunal’s decision would be binding and the IPPs would not go to any international arbitration tribunal challenging the decision.
“This is a better route,” he said, adding any other route would take three to four years to resolve the issue of outstanding excessive payments.
Besides, the hosts also raised the issue of circular debt during the discussion, which has reached to a new record of Rs2,306 billion by November 2020. Rana said the Ministry of Energy informed that the circular debt would further surge to Rs2,805 billion by June 2021.
It was further added the circular debt at the end of the Pakistan Muslim League-Nawaz-led federal government term was Rs1,147 billion. However, the PTI government added Rs465 billion in its first year of the rule, Rs538 billion in the second year and it was projected to add Rs500 billion in the third year.
Resultantly, the PTI government in three years would add Rs1,658 billion, which is 145% higher amount than the PML-N government left behind.