2% hike ordered from November 1

Govt decides to increase price of electricity by two per cent, notification issued by the ministry of water and power.

ISLAMABAD: The government has decided to increase the price of electricity by a further two per cent by a notification issued by the ministry of water and power. The World Bank and the International Monetary Fund had earlier recommended such an increase. The upward revision of electricity tariff will be applicable  retroactively from November 1.

While talking to The Express Tribune at the Pakistan Development Forum, Water and Power Minister Raja Pervez Ashraf confirmed the two per cent increase in electricity tariffs. In response to a question, he said that the government was compelled to take this decision and that the increase is not a large one. Ashraf added that the concept of cheap electricity is disappearing across the globe and the increase was implemented to end the tariff differential.

A senior official of the ministry of water and power also said that tariffs should have decreased for the last two months through the fuel surcharge adjustment mechanism but the National Electric Power Regulatory Authority (Nepra) has been unable to issue notifications as the relevant ordinance has now lapsed.

The government will now have to issue a notification to implement the changes. He added that if the notification is not issued then consumers may have to pay more in utility bills than they should.

Structural reforms

Meanwhile, the Pakistan Electric Power Company (Pepco) is set for dissolution by June 30, 2011 and eight large public corporations, including Pakistan Railways and Pakistan Steel are being restructured. Other corporations might be privatised as well. The subsidy to the power sector is also set to be reduced from Rs256 billion to Rs66 billion. The gap between production costs and revenues from electricity is also due to be resolved by June 30, 2011.

Published in The Express Tribune, November 16^th, 2010.