Curbing circular debt: Power tariff may go up by Rs2 per unit this month

The increase will affect commercial and industrial consumers.

ISLAMABAD:

The government is likely to increase the power tariff for commercial and industrial consumers this month by as much as Rs2 per unit in a bid to phase out the subsidy they have been availing, The Express Tribune has learnt.

According to sources, different proposals will be presented before Prime Minister Nawaz Sharif for approval once he returns from China. They said the tariff for commercial and industrial consumers might be raised by Re1 to Rs2 per unit in the first phase.

Water and Power Minister Khawaja Muhammad Asif said on Friday that the government would increase the power tariff this month in order to stop the circular debt from ballooning. He added that the government would also have to increase the tariff for domestic consumers within the next two to three months, warning that the circular debt could otherwise soar up to Rs150 billion.

Giving details, sources said that two or three proposals would be submitted to the prime minister. One of these, they added, seeks to protect domestic consumers using up to 200 units a month, while another aims at extending this umbrella to consumers using up to 300 units a month.



Adviser to the Prime Minister on Energy Dr Musadiq Malik said the government wanted to protect domestic consumers from any hike in the power tariff as well.

According to a ministry official, the average tariff notified by the National Electric Power Regulatory Authority (Nepra) stands at Rs14.70 per unit. The government, however, is charging consumers an average Rs8.88 per unit, he added. While the government was earlier providing an average Rs3.02 per unit subsidy to consumers, this has now soared past Rs5 per unit, he added.

The official revealed that the government has formed a policy to privatise power distribution companies (Discos) which were underperforming or going into loss. He added that different privatisation models, including public-private partnership, were being considered for this purpose.

Malik confirmed the government’s plans to privatise loss-making Discos, adding that they would take other measures, such as strengthening regulators, to safeguard the interest of consumers as well.

Published in The Express Tribune, July 7^th, 2013.