Electric surcharge of Rs3.39/unit approved

Additional Rs75b will be recovered between March and June 2023

ISLAMABAD:

The National Electric Power Regulatory Authority (Nepra), on Monday, allowed the federal government to impose an additional surcharge of Rs3.39/unit on power consumers for four months (March-June 2023) of the ongoing fiscal year.

With the addition of this fresh Rs3.39/unit, the total surcharge will become Rs3.82/unit for the next four months of 2022-23.

For FY2023-24, however, the additional surcharge of Rs3.39/unit will be reduced to Rs1/unit to cover the additional markup charges of the Pakistan Holding Limited (PHL) loans, which was not covered in the already applicable Financing Cost (FC) surcharge of 0.43/unit. The total surcharge for FY2023-24 will come to Rs1.43/unit, according to the Nepra decision issued in the motion brought by the federal government with respect to the recommendation of consumer-end tariffs for XWDiscos and K-Electric (KE).

Despite opposition from electricity consumers, Nepra decided to allow the application of an additional surcharge through its instant decision. Since the exisiting surcharge of Rs0.43/unit is not applicable of KE consiumers, a total surcharge of Rs3.82 will be charged from its consumers.

It has been submitted the KE's applicable uniform variable charge is required to be modified to recover KE's revenue requirements getermined by Nepra keeping in views the proposed targeted subsidy and cross subsidies, which will also be considered consistent with the surchange approved for XWDiscos. In view thereof, the authority has decided to allow the imposition of the surcharge on different categories of KE consumers to cover the markup charges on PHL loans.

The Power Division explained with these additional surcharges, an added amount of Rs75 billion will be billed for this period between March and June 2023, against which, around Rs68 billion will be recovered at an expected target of 90%. Similarly for FY2023-24, with the additional surcharge of Rs1/unit, an amount of around Rs74 billion will be recovered assuming recovery at 90%. Regarding, the payment of the principal amount for the PHL loans, the ministry explained that, in FY2021-22 the federal government already paid an amount of Rs202 billion for the loans reducing the balance from over Rs1 trillion to Rs800 billion as of June 30, 2022.

Similarly, for FY2022-23, an additional amount of Rs35 billion will be paid, which will further reduce the overall financing cost. The mark up for the remaining loans is being paid from the revenue collected through electricity sales and the same constrains the essential fuel and debt payments to suppliers.

Earlier, the Economic Coordination Committee of the Cabinet, in its decision dated February 10, 2023, appproved the additional surcharge of Rs3.39/unit for the period from March to Jun 2023. It also decided that the same be submitted to the authority for incorporation in the latest schedule of tariffs for XWDiscos.

The aurcharge so collected in wihtin 10% of the aggregate revenue requirement of all electric power suppliers to engage in the supply of electric power to end consumers, as determined by the authority. 

The consumers present during the hearing, opposed the additional surcharge saying that the losses incurred due to the inefficiencies of  Discos are imposed on the common man are being recovered via additional surcharges.

During the hearing, Nepra also directed the Ministry of Energy to acquire the opinion of the Ministry of Law and Justice in the matter. Upon receiving the legal opinion, the authority observed that the government is empowered under Section 31 (8) of the Nepra Act to impose the said surcharges.

The surcharge shall be applicable with effect from March 1, 2023, and shall be shown as a separate head in consumers bills, it added.