New power tariff slabs on the cards

Changes in slabs will reduce volume of subsidy in energy sector

Our Correspondent May 19, 2021


The government has decided to create new categories of electricity tariffs for consumers in a bid to reduce the volume of subsidy.

The decision is likely to be implemented from June 1, 2021.

Sources told The Express Tribune that the government had not set the timeline for implementation of the decision. It has authorised the finance minister to decide the timeline of implementation.

Following its implementation, eight million consumers will be out of the subsidy net in the first phase. At present, 22 million electricity consumers are getting the subsidy. However, it will be limited to 13.9 million consumers.

The federal government will request the National Electric Power Regulatory Authority (Nepra) on behalf of power distribution companies (DISCOs) to make changes to the existing tariff slabs.

Nepra will be requested to expand the definition of lifeline consumers to include the residential Non-Time of Use (ToU) consumers having maximum of last 12 months and current month’s consumption of 100 units. Two tariff rates for 50 and 100 units will continue.

Nepra will be requested to create a new category of protected customers, which include those consuming 200 kWh in a billing month and consistently consumed 200 kWh for the past six months.

The slab of 301-700 units will be split into four slabs; 301-400, 401-500, 501-600 and 601-700 with the same marginal tariff. Each of these slabs will continue to get the previous slab benefit of 300 kWh.

Such adjustment will be reflected by way of modification in the relevant SRO. The Power Division proposed that these changes may be implemented with effect from June 1, 2021.

Meanwhile, the cabinet on Tuesday approved the release of first instalment of payments to the independent power producers (IPPs).

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The Power Division informed the cabinet that the Economic Coordination Committee (ECC) had constituted a committee on April 28, 2021 to deliberate on the issue and finalise the recommendations to be presented in the next meeting of the ECC.

In compliance with the ECC decision, the committee held a meeting on May 4, 2021, chaired by the finance minister.

Earlier, the Power Division briefed the ECC about the case and requested the consideration of recommendations as agreed by the economic decision-making body.

The Power Division had made the recommendations to the economic decision-making body. It recommended that the matter of alleged savings in the tariff component of IPPs under the 2002 policy was already under investigation by the National Accountability Bureau (NAB).

NAB may be requested to examine and validate the process of negotiations and signing of agreements including the Arbitration Submission Agreement.

It further said that NAB may also inform if they had any objection to the signing of these agreements and making payments to the IPPs under the 2002 policy.

The ECC had approved payment of first instalment of 40% to the IPPs under the payment mechanism. The position was tabled before the cabinet on Tuesday for ratification. The cabinet approved it after discussion.

Published in The Express Tribune, May 19th, 2021.

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