ECC increases K-Electric tariff

The government on Wednesday agreed to increase electricity tariff for K-Electric consumers and also approved supplementary grants of Rs139 billion, including Rs113 billion for power plants to keep running them and avoid default on payments for fuel supplies.

Headed by Finance Minister Miftah Ismail, the Economic Coordination Committee (ECC) of the cabinet cleared an increase of 57 paisa per unit in the electricity rates for K-Electric consumers. However, it postponed decision on another proposal that called for imposing a surcharge of Rs1.45 per unit on K-Electric consumers to recover Rs113.1 billion in previous dues on account of quarterly tariff adjustments. The tariff hike of 57 paisa per unit will be recovered over a threemonth period.

The ECC directed the National Electric Power Regulatory Authority (Nepra) to issue a revised schedule of tariff determined for the quarter October-December 2021, or incorporate into the latest schedule of tariff for the quarter January-March 2022 after incorporating tariff rationalisation. The ECC also considered a proposal to impose a surcharge of Rs1.45 per unit on K-Electric consumers to recover the outstanding cost of electricity generation on account of quarterly tariff adjustments (QTAs) of K-Electric and the associated financial impact.

The ECC, after detailed discussion, allowed the utilisation of the available budget of Rs37 billion as advance subsidy in fiscal year 2021-22 for onward release to the Central Power Purchasing AgencyGuarantee (CPPA-G) due to the paucity of time, according to the decision. The matter of imposing surcharge will be taken up again.

Owing to various reasons, the tariff for K-Electric consumers had not been increased while prices for the consumers of the rest of the country went up, the ECC was informed. The ECC approved the payment of Rs96.1 billion to the 2002 independent power producers (IPPs) as second instalment under the IPPs renegotiation deals.

Out of that sum, Rs78.7 billion will go to 11 IPPs of the 2002 policy and Rs8.8 billion to the Nishat Chunian power plant. Another Rs8.7 billion will be paid to the TNB Liberty Power Plant of 1994 policy. Funds for Foundation Power Plant will be released subject to the condition that it signs an arbitration submission agreement. The previous government had renegotiated the IPP deals to clear their outstanding dues except for Rs52 billion that was under litigation.

Last week, the Law Division nominated Justice (Retired) Maqbool Baqar as the arbitrator and Ajuris Advocate and Corporate Council on behalf of the federal government. For the current fiscal year, the government had budgeted Rs434 billion payments to the IPPs. These include Rs50 billion for Chinese IPPs, Rs72 billion for the government-owned power plants and Rs295 billion for the IPPs set up under the 1994 and 2002 power policies as part of the settlement deals.

The ECC allowed payment of Rs17 billion to three RLNG-based public sector power plants – Haveli Bahadur Shah, Bhikki and Balloki power plants – to meet the cash requirement and help them avoid default on LNG supplies. These power plants were on the verge of default on bills for fuel supplies due to payment of only Rs26 billion to them by the CPPA-G as against the promise of Rs217 billion. As of June 14, Rs213 billion was to be paid to the three public sector LNG power plants.

The ECC approved a supplementary grant of Rs1.2 billion in favour of the Ministry of Interior for payment to the families of deceased and martyred employees under the prime minister’s assistance package in order to support the families. The ECC approved Rs6.1 billion in favour of the Federal Directorate of Immunisation (FDI) to procure vaccines for uninterrupted supply to the provinces and to enhance the immunisation programme for children under one year of age against 10 vaccine preventable diseases (VPDs).

The ECC approved Rs3.1 billion for the Ministry of Kashmir Affairs and Gilgit-Baltistan for further release to the AJK government for the permanent settlement of Indian Occupied Kashmir refugees stranded in AJK. On a summary submitted by the Ministry of Housing and Works for the allocation of additional funds for repair and maintenance of Ministers’ Enclave, Islamabad, the ECC rejected the proposal due to the austerity measures taken by the present government.

The previous PTI government had approved Rs142.3 million from 2018 to 2021 for repair and maintenance of the Ministers’ Enclave. The ECC approved Rs6 billion in favour of the Ministry of Interior and Rs3.8 billion for the Ministry of Foreign affairs to meet the budgetary shortfall. It approved Rs5 billion in supplementary budget for Pakistan Railways to settle a major portion of its pending liabilities with directives to make the railways a profitable business entity. The entity had demanded an additional Rs15 billion to meet the salary and pension needs of 64,126 employees and 124,881 pensioners.