NEPRA seeks review of subsidy

Says subsidy withdrawal will increase burden on households consuming 300 units

ISLAMABAD:

National Electric Power Regulatory Authority (Nepra) Chairman Tauseef H Farooqi has said that withdrawal of power subsidy for consumers using up to 300 units per month will increase their burden and called on the government to review the decision taken in this regard.

He made the remarks at a public hearing held on Tuesday to discuss the proposed increase of up to Rs1.68 per unit in base tariff of power distribution companies for consumers using more than 200 units of electricity per month.

He added that the federal government had requested an increase of Rs1.39 per unit in the base power tariff to Rs16.8 per unit.

However, the government has been requested not to increase the base tariff for consumers using up to 200 units per month and instead it has been recommended to hike electricity price by Rs1.68 per unit for the remaining categories.

Nepra approved an increase of Rs3.35 per unit in base tariff in March 2021, however, the government allowed a hike of Rs1.95 only. The remaining Rs1.39 increase was delayed and it would now take effect from November 1, 2021. The increase in base tariff will be applicable to all the distribution companies and K-Electric.

Speaking at the public hearing, an official of the Power Division requested the authority not to increase the base tariff for lifeline consumers as well as those using up to 200 units of electricity per month.

Earlier, subsidy was available to the consumers using up to 300 units, however, it had now been limited to households which used up to 200 units, noted Nepra chairman.

“Although the decision to offer subsidy is the discretion of the federal government, still it needs to review its decision of withdrawal of subsidy for the consumers using up to 300 units of electricity per month as it will increase their burden,” Farooqi remarked.

The Power Division official said that if there was a uniform increase in tariff for all consumers, then the hike would amount to Rs1.39 per unit. However, if the consumers using up to 200 units were exempted from the hike, the tariff had to be raised by Rs1.68 per unit, he said.

The Nepra official said that following the hike, the average base tariff would rise to Rs15.36 per unit.

Hafiz Naeemur Rehman of Jamaat-e-Islami Karachi said during the hearing that the consumers using up to 300 units were being deprived of the subsidy.

Nepra chairman remarked that the decision on subsidy was the domain of the federal government and the regulator could not make a decision on it.

Rehman requested Nepra not to allow any further increase in power tariff.

Last week, Nepra allowed K-Electric to increase power tariff by Rs0.6890 per kilowatt-hour (kWh) on account of fuel cost adjustment for July 2021.

The tariff hike will have an impact of Rs1,355 million, which will be recovered in consumer bills of November 2021. It will be applicable to all consumer categories except for lifeline consumers.

On October 9, Nepra also allowed power distribution companies to ramp up electricity tariff by Rs1.95 per unit to recover a total of Rs30.4 billion from consumers.

The regulator approved the increase in tariff on account of fuel cost adjustment for August 2021. It came in response to a request from the Central Power Purchasing Agency-Guarantee (CPPA-G), which sought a tariff hike of Rs2.0719 per kWh with total impact of Rs32.30 billion on consumers.

Nepra conducted a public hearing on September 30 and approved a positive fuel cost adjustment of Rs1.9539 per kWh with total impact of around Rs30.4 billion.

Published in The Express Tribune, November 3^rd, 2021.

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