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ISLAMABAD: The Power Division has reportedly not yet secured the federal cabinet’s nod for an increase in the base electricity tariff by Rs4.96 per unit across the country for FY 2023-24 to be applicable from July 1, 2023, well-informed sources told Business Recorder.

The Power Division, sources said, has prepared its summary for the federal cabinet on the basis of the National Electric Power Regulatory Authority (Nepra)’s determination, which implies an increase of Rs4.96 per unit will be applicable across the board.

However, vulnerable categories of consumers, ie, lifeline consumers will be extended subsidy approved in the federal budget 2023-24.

Base power tariff hiked by Rs4.96

The sources said, a team of Central Power Purchasing Agency–Guaranteed (CPPA-G), on Monday, gave a detailed presentation to additional secretary (Power Division-II) who deals with tariff issues on different scenarios to be presented to the Cabinet (political people) for seeking nod increase in base tariff.

The purpose of the meeting was preparing a case that lifeline consumers will be given a subsidy of Rs150 billion and the poorest of the poor will get more share in the subsidy.

Insiders claim that the Power Division wanted an increase in the base tariff of around Rs10 per unit so that the impact of Quarterly Tariff Adjustments (QTAs) and Fuel Charges Adjustment (FCA) during the year, can be minimised.

However, with an increase in base tariff by Rs4.96 per unit means that heavy QTAs and FCAs will also be passed on to the consumers as no one knows where the devaluation of the rupee will stop. Capacity payment of power plants, QTAs and FCAs are entirely linked to rupee-dollar parity.

The sources said notification of the new base tariff will be issued soon after formal approval from the federal cabinet, adding that recovery of the new base tariff will be recovery in entirety not in phase like it was done in 2021.

According to the Nepra, the total Power Purchase Price (PPP) of Discos for the FY 2023- 24, (after excluding the share of KE), works out as Rs2,866, 159 million, which includes Rs840,462 million for fuel and variable O&M cost and Rs2,025,697 million as capacity charges including Use of System Charges (UoSC) of NTDC and PMLTC and Market Operator Fee (MoF) of CPPA-G.

The capacity charges translate into Rs6,460.81/kW/month based on the projected average monthly MDI of 26,128 MW. Thus, the capacity charges work out as around 71 per cent of the total projected PPP of XWDISCOs, whereas, energy cost is around 29 per cent of the total projected PPP.

In terms of average per unit PPP Discos on unit purchased basis i.e. before adjustment of allowed T&D losses of XWDISCOs, capacity charges work out as Rs16.22/kWh, whereas, energy charges are Rs6.73/kWh, totaling to Rs22.95/kWh for the FY 2023-24. The national average power purchase price works out as 22.42/kWh.

After notification of the new base tariff, the average tariff will become Rs29.78 per unit from July 1, 2023. The government intends to recover Rs477 billion from consumers during the current fiscal year.

The sources further stated that no notification is issued so far with respect to the increase in peak hours by two hours, meant to put more burden on consumers.

In 2022, the Pakistan Tehreek-e-Insaf (PTI) government raised the base tariff by Rs7.91 per unit in three phases due to which the base tariff jumped to Rs24.82 per unit from Rs16.91 per unit.

This implies the government had to increase the base tariff by Rs4.96 per unit to raise the current base tariff of Rs24.82 per unit to Rs29.78 per unit from July 1, 2023.

The assumptions for the increase in base tariff were as follows: (i) RLNG price, Rs3,554 per ton; (ii) imported coal at Rs42,584 per unit from Rs1,951 per unit; (iii) local coal Rs13,070 per unit from Rs1,220 per ton; (v) gas Rs1,103 per MMBTU; (vi) furnace oil Rs109,947 per ton; (vii) US dollar to PKR, Rs286; (viii) Pak-CPI, 17.07 percent; (ix) US-CPI, 2.45 percent; (x) KIBOR, 19.4 percent; and (xi) LIBOR, 4.5 percent.

Copyright Business Recorder, 2023


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