This increase in tariff will be reflected in bills of November 2012. However, lifeline consumers using up to 50 units per month and consumers of Karachi Electric Supply Company (KESC) will be exempt from the hike.
Nepra, which regulates the power sector, approved the increase in tariff for distribution companies in a public hearing held on Tuesday with its Acting Chairman Ghiasuddin Ahmed in the chair.
Earlier, the Central Power Purchasing Agency (CPPA) told Nepra that the country was relying on import of expensive furnace oil to generate electricity as hydropower production had gone down due to water shortage. It had demanded a tariff increase of Rs2 per unit to cover the fuel cost of power companies.
It said the reference fuel price for April was set at Rs7.69 per unit but the actual price was higher at Rs9.69 per unit. Fuel cost of power companies stood at Rs63.69 billion for the month.
Electricity consumers have been experiencing tariff rises for many months on account of fuel price adjustment. Tariff has been increased by Rs0.58 per unit for February and Rs1.79 per unit for March, which will be recovered in bills of September and October 2012.
Earlier, the tariff was pushed up by Rs6.03 per unit for four months from October 2011 to January 2012.
Inefficiency, bad governance
According to experts, the energy sector is plagued by inefficiencies and bad governance, but the government instead of addressing these issues, shifts the burden to consumers with tariff increases.
Besides the fuel price adjustment, the government increased power tariff by 16% on May 16 this year. Total addition to the tariff may be over 20% in the current financial year as two more jerks of over Rs3 per unit are on the cards before the close of year on June 30.
In previous financial year 2010-11, the tariff rose by 22% in addition to fuel price adjustment surcharge.
Since coming to power in 2008, the present government has increased power tariff by 94% in addition to revisions on account of fuel price adjustment. However, the condition of the power sector has deteriorated as no major reform except for dissolution of Pakistan Electric Power Company (Pepco) was undertaken due to political compulsions.
Under the reforms, the government was to dissolve Pepco, reconstitute board of directors of power companies and hire professionals from private sector as chief executive officers (CEOs). Pepco stands dissolved and boards were reconstituted in 2009-10, but several companies are still being run by acting heads.
According to an official of the Ministry of Water and Power, it is shocking that the prime minister has approved appointment of new heads of distribution companies, but orders are not being issued for fear of protests from employees.
Earlier, the government had hired a professional from the private sector as head of Quetta Electric Supply Company, but the order was withdrawn to placate angry employees.
Owing to the bad condition of power companies, the central government has also offered provinces to run them but provinces have refused due to heavy losses. Especially, Khyber-Pakhtunkhwa, Sindh and Balochistan are not ready to operate these firms because of bad governance.
Published in The Express Tribune, May 30th, 2012.
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