ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) is to conduct public hearing on the federal government's motion for proposed increase in base tariff of power Distribution Companies (Discos) by 1.95 per unit across the board on February 4, 2021. The regulator had determined Rs 3.34 per unit increase in Discos’ tariffs, but the government approved Rs 1.95 per unit.
The Government, in its Tariff Motion has conveyed to the regulator to incorporate targeted tariff differential subsidy of Rs 185 billion to ensure uniform tariff. This subsidy will be in addition to budgeted subsidy of over Rs 124 billion for Discos for the FY 2020-21, whereas the amount of subsidy for KE was Rs 25.5 billion including tariff differential subsidy of Rs 10 billion.
According to motion, the inter-Discos' tariff rationalization is not aimed at raising any revenue for the Federal Government, as it is within the determined revenue requirements of Discos consolidated in terms of section 31(4) of the Act.
Power Division maintained that tariff rationalization enables the fulfillment of the parameters set forth in the Constitution as well as the policy approved by the CCI, including; (i) the socioeconomic objectives; (ii) the budgetary targets in field; (iii) protection of low-end consumers from price escalation through provision of subsidy; and (v) maintaining uniform of tariff across the country and regions for each of the consumer categories.
Once considered and approved, it will lead to determination of 'uniform final tariff' in terms of section 31(7) of the Act, for notification by the Federal Government to the extent of modification and supersession of existing determined notified rate (inclusive of subsidy/tariff rationalization surcharge/inter-Discos tariff rationalization) in SRO 374(1)/2018 to 383(1)/2018 of March, 22, 2018 as modified by SRO 1-10 of January 1, 2019.
The Power Division noted that the Motion is being filed by the Federal Government with respect to consumer-end tariff recommendations under section 7, 31(4) and 31(7) of the Act for issuance of uniform schedule of tariff of Discos by incorporating targeted subsidy and inter-Discos tariff rationalization pursuant to guidelines for the category of each Nepra determined at notified rate (inclusive of subsidy/tariff rationalization/surcharge/inter Disco tariff rationalization).
The power minister claims that the impact of capacity payment for one year is Rs 218 billion. To recover this amount, an increase of Rs 2.18 per unit had been calculated but the government has decided to pass on only Rs 1.95 per unit.
The annual capacity payments to IPPs were Rs. 185 billion in 2013, Rs. 468 billion in 2018, Rs. 642 billion in 2019; Rs. 860 billion in 2020 and would reach Rs. 1.455 trillion.
Copyright Business Recorder, 2021
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