Power tariff to be raised in three phases

ISLAMABAD: The federal government has decided to pass on Rs7.91 per unit determined by Nepra in three phases, along with Rs0.20 per unit hike on account of subsidy rationalization phase-II, well-placed sources in Power Division told Business Recorder.

The Power Division presented two options before the Economic Coordination Committee (ECC) of the Cabinet, however, during the meeting, some of the members floated a third option, the sources added.

“The ECC discussed that another option is also possible in order to avoid immediate price shock to consumers. The tariff may be passed in three phases, Rs3.5/unit in July, Rs3.5/unit in August and remaining Rs 0.91/unit may be passed on to the consumers in the month of October 2022,” the sources maintained.

The Power Division shared that the total tariff differential subsidy requirement on this proposal would be around Rs 243 billion. ECC inquired about notification of subsidy reform phase-l approved by Cabinet in the month of December 2021. Power Division shared that NEPRA had issued the determination in March 2022 which was pending for notification in official gazette. The ECC directed Power Division to notify the subsidy reform phase-l notification with effect from July 1, 2022 along with annual rebasing.

After detailed discussion, the ECC set aside the proposal of Power Division, on the summary Economic Coordination Committee (ECC) of the Cabinet considered as the “tariff rationalization for power sector” and directed the Power Division to implement the subsidy reform adjustment which was approved in December 2021, but was not implemented.

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Moreover, ECC also approved the annual rebasing plan with the following modifications, as revisited by the Power Division based on the deliberation in the meeting: (i) pass on Rs 3.5/unit in July 2022,Rs 3.5/unit in August and remaining increase of Rs 0.91/unit shall be passed on to the consumers in the month of October 2022; and (ii) pass on Rs 0.20/unit as per subsidy reform phase—II from July 1, 2022; (iii) uniform tariff so determined by Nepra and recommended by it as “final tariff” for notification in the official gazette, be notified to the extent of modification and supersession of existing notified rate (inclusive of subsidy/tariff rationalization surcharge) in SROs 182 to 191 ()/2021 of February 12, 2021, as amended vide SROs 1280 to 1289 (1)/2021 of October 01, 2021, and SROs 1419 to 1428 (1)/2021 of November 05, 2021; (iv) tariff rationalisation by way of adjustments be approved for K-Electric to maintain uniform tariff across the country; and (v) on the same pattern of Discos, Nepra may be approached to issue revised Schedule of Tariff (SoT) determined for the quarter October to December 2021 with prospective application of GoP rates after incorporating tariff rationalization and upon approval of Nepra notify the same in the official gazette by way of modification in SRO 1429(1) 2021, 192(1)2021, 1037(1) 2020 and 757(1) 2019.

Copyright Business Recorder, 2022