ECC okays tariff hike for KE
The government on Monday approved an increase in electricity prices for the consumers of Karachi and also amended the national electricity transmission policy in order to award two projects to Gulf countries in line with directives of the Special Investment Facilitation Council (SIFC).
The decisions were made by the Economic Coordination Committee (ECC) of the cabinet, headed by Finance Minister Ishaq Dar.
The ECC approved a Rs80 billion foreign remittances incentive package and gave the go-ahead to a Rs30 billion subsidy package for the poorest customers of Utility Stores Corporation (USC).
The committee approved a summary on the application of uniform tariff to K-Electric (KE) consumers by way of tariff rationalisation, according to the finance ministry.
It green-lighted tariff rationalisation for KE by way of adjustments that would be applicable to the consumption in April, May and June 2023, which would be recovered from consumers over three months (July, August and September 2023 respectively).
Effectively, the consumer prices will increase around Rs5 per unit, including the applicable taxes and charges.
The committee shortened the tariff approval process and approved the issuance of new guidelines for the National Electric Power Regulatory Authority (Nepra).
It directed that in order to maintain uniform tariff across the country, Nepra would determine the application of quarterly tariff for the government-owned distribution companies and the same would be considered for changing KE tariffs.
It directed that subsidy against the determined tariff would be assessed on an annual basis instead of monthly or quarterly basis.
The ECC also approved a summary of the Ministry of Energy on proposed amendments to the Transmission Line Policy 2015 (for inclusion of ancillary service projects in its scope), according to the finance ministry.
The amendments are being made to incorporate two energy projects that the joint civil-military SIFC has approved for offering them to Gulf countries. These projects include 2,000 MVAR Reactive Compensation and 1,000 MVAR Battery Energy Storage System. They fall in the category of ancillary services.
SIFC has approved 28 projects for offering them to Gulf countries under negotiated deals, including 10 projects in the power sector. These 10 projects include two transmission line-related schemes.
The ECC approved the award of those projects to Gulf countries on a cost-plus basis. The concession term of ancillary services will be up to 15 years, depending on the nature of projects.
The ECC approved a Rs79.5 billion incentive package for commercial banks to promote home remittances, which dropped $4 billion in the last fiscal year due to the government’s wrong exchange rate policies.
The committee gave its nod for the increase in telegraphic transfer charges from 20 Saudi riyals to 30 riyals per $100, which would compensate the increase in cost of doing business globally.
Similarly, it agreed on a significant increase in incentives for the incremental rise in remittances from banks. Performance-based cash incentives were approved where banks would get Rs1 per US dollar if the increase in remittances was 5% over last year compared to the existing 50 paisa per dollar.
In case of a 10% increase, the banks will get Rs2 per dollar and they will receive Rs3 per dollar if the growth in remittances is above 10%.
The ECC authorised the SBP to set the limit for giving incentives to exchange companies by lowering the current ceiling of 100% surrender of dollars raised from the open market in the inter-bank market to qualify for Rs1-per-dollar incentive.
The ECC allowed the launch of a lucky draw scheme and approved Rs20.5 billion to incentivise remittances. It approved the discontinuation of the M-Wallet remittance scheme.
The committee considered a comprehensive report on the Pakistan Agriculture Storage and Services Corporation (Passco) wheat damaged by rains and floods in 2022, which was presented by the Ministry of National Food Security and Research.
Around 44,785 tons of wheat was damaged due to the floods and its total value was estimated at Rs3.32 billion. The government advertised to sell the damaged wheat and got offers almost equal to the cost of the commodity.
The ECC considered a summary of the Ministry of Energy (Power Division) regarding a contract with Tavanir, Iran for the purchase of 104 megawatts of electricity. It approved amendments to the contract related to the extension of tariff for the existing supply of 104MW (Jackigur-Mand) from January 1, 2022 to December 31, 2024, negotiating tariff for additional supply (Polan-Gabd) and the tariff agreed for additional supply of 100MW through the Polan-Gabd transmission line from March 16, 2023 to December 31, 2024.
It approved Rs3 billion in supplementary grant for the Prime Minister’s Health Insurance Scheme for media workers, journalists and artists and the provision of Film Finance Fund to the information and broadcasting ministry.
Published in The Express Tribune, August 8th, 2023.
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