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Print Print 2023-09-20

Power Division shares CDMP with IMF, World Bank

  • Official argues average tariff will remain Rs 42 or Rs 43 per unit as no substantial variation is expected in estimates of CDMP
Published September 20, 2023

ISLAMABAD: The Power Division has shared the Circular Debt Management Plan (CDMP) with the International Monetary Fund (IMF) and the World Bank, which became the base for revision in base tariff including impact of Quarterly Tariff Adjustments (QTAs), well-informed sources told Business Recorder.

“When Nepra approved re-basing in tariff in July, 2023, CDMP got approved from the federal cabinet after which no adjustment has been made in CDMP,” said an official on condition of anonymity.

At the time the IMF team visited Islamabad, CDMP was at an initial stage, however, when re-basing was approved by Nepra, CDMP was approved by the cabinet when the rupee-dollar parity was Rs 286/$ and shared with the IMF, he said, adding that CDMP is formulated just once for the entire year. However, during the year, changes, if any, are covered through adjustment in QTAs.

Updated CDMP as per SBA yet to be approved

Rebasing was based on Rs 296/$, RFO, Rs 110,000 per ton, RLNG Rs 3,555 per MMBTU, imported coal Rs 42,584 per ton, USCPI, 318, local CPI 263 and KIBOR 19.40%.

“Any difference between benchmark of Rs 286/$ and exchange rate at time of filing QTA adjustment petition, will be made part of petition in October 2023,” the official said, adding that the exchange is expected to be below Rs 300/$.

The official argued that the average tariff will remain Rs 42 or Rs 43 per unit as no substantial variation is expected in estimates of CDMP.

However, if dollar goes out of control and fuel prices (LNG and coal) rise further, tariff will be adjusted as both factors are not in the control of the Power Division.

In July, Nepra had approved re-basing of Rs 5 per unit across the board, after which substantial increase in QTA and FTAs were announced, which raised electricity rate manifold. The Power Division wanted positive adjustment of Rs 10 per unit through re-basing to offset the jerks of QTAs and FCAs.

The official further stated that Nepra did not allow increase in tariff as per assumptions of the Power Division and gave a good judgement and whatever impact was proposed has been passed on to the consumers and the remaining impact will continue to be passed on to the consumers.

Secretary Power, Rashid Langrial said that CDMP is approved by the federal cabinet and shared with the IMF and World Bank, adding that all assumptions of CDMP are supposed to be implemented.

Copyright Business Recorder, 2023

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