Power surcharge of Rs1.52 per unit on cards

Govt seeking to recover over Rs24 billion from Karachi consumers

ISLAMABAD:

Another electricity tariff hike is on the cards for Karachi consumers as the government is in the process of imposing an additional surcharge of Rs1.52 per unit.

Power-sector regulator – the National Electric Power Regulatory Authority (Nepra) – conducted a public hearing on Tuesday to consider a federal government’s request for the consumer tariff of K-Electric (KE).

The hearing was told that though the decision on quarterly tariff adjustment had been made in May 2019, it was not implemented owing to the Covid-19 pandemic. However, ex-Wapda power distribution companies made the quarterly tariff adjustment.

The hearing was informed that the end-consumer tariff was Rs32 per unit and there was 10% space for levying a surcharge. “Why are we referring to surcharges rather than increase in electricity rates on account of quarterly adjustment,” a Nepra official asked.

Officials of the Power Division pointed out that Nepra had suggested two ways for making recoveries from consumers, either through a subsidy or a surcharge. That was why the division proposed an increase in tariff through slapping a surcharge of Rs1.52 per unit.

Nepra asked whether it was a prudent cost of electricity that the government was seeking to recover from consumers. It argued that the government’s case for imposing the surcharge was not strong. The regulator was told that the collection through power surcharge could be used for public sector projects and pay off financial obligations of the government.

Through the Rs1.52-per-unit surcharge, the government is seeking to recover over Rs24 billion from Karachi consumers. The surcharge would cover three-year-old collections; why such old receipts were not requested earlier, Nepra questioned.

KE and consumers were fighting a case in court which led to the delay, the Power Division officials responded. Due to corona, the government had stopped putting additional load, they said, adding that Rs275 billion was to be recovered from consumers, which translated into Rs17 per unit.

The officials pointed out that the government had decided to provide subsidy instead of burdening consumers, adding that the federal government would bear a burden of Rs250 billion in the form of subsidy. “And a burden of only Rs25 billion will be put on electricity consumers.”

“This is a quarterly adjustment but why you call it a surcharge,” Nepra Member Rafiq Shaikh asked.

Power Division officials contended that the recovery with retrospective effect could lead to a legal debate, therefore, the government was giving it the name of power surcharge.

In the application, the increase had also been applied to lifeline consumers, Shaikh pointed out. However, the Power Division officials denied that the hike would be applicable to the lifeline consumers as well.

The matter of collecting heavy taxes including income tax from people through electricity bills also came up for discussion.

Nepra took notice of the matter and decided to hold a separate session on the collection of taxes from electricity consumers. Notices would be issued to all participants before the session, Nepra officials said.

Power Division officials clarified that they did not get any tax, rather it was collected by the Ministry of Finance and the Federal Board of Revenue (FBR).

It would be better to call the Ministry of Finance or the FBR to discuss the matter, they said, adding that taxes were being collected from electricity consumers as per rules. “How much income tax is to be collected from the consumers is specified in the Income Tax Act,” Nepra said and gave directives to submit details of how many taxes were being received from electricity consumers.

Nepra completed the hearing on the federal government’s request to levy the additional surcharge of Rs1.52 per unit. It reserved the decision and would issue a detailed verdict after reviewing the necessary data.

 

Published in The Express Tribune, August 16^th, 2023.

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