Electricity consumers will no longer enjoy subsidy sweetener

Only ‘lifeline’ consumers, using up to 100 units, will be given subsidy.

ISLAMABAD:

With energy companies reeling from the impact of Rs500 billion circular debt, the government has decided to end subsidy for power consumers, except for lifeline consumers, in the upcoming financial year 2012-13.

According to the Annual Plan 2012-13 released on Friday, the country is facing a massive deficit in the power sector on account of swelling inter-corporate debt and the problem arising due to difference between tariffs determined by the National Electric Power Regulatory Authority (Nepra) for different distribution companies and the uniform tariff charged by the government.

The circular debt rises by Rs30 billion a month, in which the tariff differential has a share of 40%. Currently, the tariff differential subsidy is given to consumers of all slabs, causing major problems in the system.

“In the second energy conference held in March 2012, it was decided to increase the lifeline slab from 50 units to 100 units per month. Furthermore, it was decided to remove the subsidy for consumers with monthly consumption above 100 units,” reveals the annual plan.

Electricity outages are estimated at around 25% of the demand. Average supply has remained at 12,400 megawatts against demand of 17,400MW, in fiscal year 2012 primarily due to fuel supply constraints and low hydropower generation.

The government plans to enhance installed generating capacity from 23,718MW in June 2012 to 24,822MW in June 2013 through addition of 1,104MW.

Work on different projects will be initiated including 121MW Allai Khwar Hydropower Project, 1,200MW imported coal-based integrated jetty and power plant, rehabilitation of Genco-II TPS Guddu that will add 405MW and installation of an additional 747MW plant with the help of China at Genco-II Guddu.

According to the annual plan, the government will enhance crude oil production to 69,000 barrels per day and gas production to 4.791 billion cubic feet per day (mmcfd) in 2012-13. Gas supply will be started to around 391,705 new consumers and about 580 new towns and villages will be connected to the pipeline network.

Gas companies will invest Rs38.381 billion in transmission, Rs21.604 billion in distribution and Rs13.143 billion in other projects, bringing total investment to Rs73.128 billion.

To push ahead with the Iran-Pakistan pipeline project, the government will enter contracts with pipe suppliers by September, finalise a feasibility study, complete impact assessment and
appoint an engineering, procurement and construction (EPC) contractor in March next year. Land acquisition formalities will be completed by July 2013.

For both power and fuel sectors, an allocation of Rs192 billion has been made against utilisation of Rs147 billion in the outgoing fiscal year 2011-12.

Published in The Express Tribune, June 2^nd, 2012.