Politically tough call: Ministry, NEPRA at odds over power tariff increase
Power ministry rejects proposal for including fuel price changes in tariff.
ISLAMABAD:
The Ministry of Water and Power and the National Electric Power Regulatory Authority (Nepra) are locked in a dispute over a proposed massive increase of up to Rs6.50 per unit in power tariff including the impact of fuel price changes, say officials.
Nepra has suggested an increase in power tariff with a change in the mechanism by incorporating fuel price movements at a time when legislators of the Pakistan Peoples Party (PPP) are pressing the government to refrain from raising tariff.
According to officials, the water and power ministry has rejected the tariff recently determined by Nepra, which proposes an increase of Rs1 to Rs4.35 per unit for consumers of Islamabad Electric Supply Company and Rs1 to Rs6.50 per unit for Peshawar Electric Supply Company.
“The government cannot pass on this massive impact to the consumers in one go, which will trigger a popular protest and can hurt the PPP in upcoming elections,” an official said, adding they had always advocated a gradual increase in tariff.
Official sources said the water and power ministry was seriously concerned over the move by Nepra to incorporate fuel price changes in power tariff for distribution companies by increasing the benchmark price of furnace oil from Rs45,000 to Rs65,000 per ton. According to the ministry, Nepra cannot change the benchmark which will deny consumers the benefit of decline in fuel prices.
“The ministry will take up the issue of oil price benchmark with other ministries concerned after finance minister returns from Davos,” an official said, adding after this Nepra would possibly be asked to take back its decision of changing the benchmark.
The government has recently empowered Nepra to notify increase in power tariff on account of fuel price adjustment on a monthly basis.
The government is facing a dilemma as neither can it make a hefty increase in power tariff nor can it bear a huge subsidy.
In a bid to reduce circular debt, the government has made a Rs160 billion debt swap arrangement with banks to help increase power production by 3,000 megawatts and ease the shortage.
According to officials, the water and power ministry has also rejected figures being given by Pepco and National Transmission and Dispatch Company (NTDC) about power demand in the country. There was no scientific mechanism to assess power demand, they added.
Published in The Express Tribune, January 27th, 2012.
The Ministry of Water and Power and the National Electric Power Regulatory Authority (Nepra) are locked in a dispute over a proposed massive increase of up to Rs6.50 per unit in power tariff including the impact of fuel price changes, say officials.
Nepra has suggested an increase in power tariff with a change in the mechanism by incorporating fuel price movements at a time when legislators of the Pakistan Peoples Party (PPP) are pressing the government to refrain from raising tariff.
According to officials, the water and power ministry has rejected the tariff recently determined by Nepra, which proposes an increase of Rs1 to Rs4.35 per unit for consumers of Islamabad Electric Supply Company and Rs1 to Rs6.50 per unit for Peshawar Electric Supply Company.
“The government cannot pass on this massive impact to the consumers in one go, which will trigger a popular protest and can hurt the PPP in upcoming elections,” an official said, adding they had always advocated a gradual increase in tariff.
Official sources said the water and power ministry was seriously concerned over the move by Nepra to incorporate fuel price changes in power tariff for distribution companies by increasing the benchmark price of furnace oil from Rs45,000 to Rs65,000 per ton. According to the ministry, Nepra cannot change the benchmark which will deny consumers the benefit of decline in fuel prices.
“The ministry will take up the issue of oil price benchmark with other ministries concerned after finance minister returns from Davos,” an official said, adding after this Nepra would possibly be asked to take back its decision of changing the benchmark.
The government has recently empowered Nepra to notify increase in power tariff on account of fuel price adjustment on a monthly basis.
The government is facing a dilemma as neither can it make a hefty increase in power tariff nor can it bear a huge subsidy.
In a bid to reduce circular debt, the government has made a Rs160 billion debt swap arrangement with banks to help increase power production by 3,000 megawatts and ease the shortage.
According to officials, the water and power ministry has also rejected figures being given by Pepco and National Transmission and Dispatch Company (NTDC) about power demand in the country. There was no scientific mechanism to assess power demand, they added.
Published in The Express Tribune, January 27th, 2012.