LAHORE, Dec 29: Wapda has offered to the federal government that it is prepared to reduce further power tariff from 50 to 88 paisa per unit from Jan 1 next provided it gives some relief to the utility to help lessen the impact of the tariff reduction which ranges from Rs11 billion to Rs20 billion during the next six months. The recent relief of 12 paisa per unit announced by the federal cabinet would have an impact of Rs3 billion.

The offer, according to a Wapda spokesman, has been made as the authority realizes the fact that the electricity rates are high and that its consumers are clamouring for the reduction in the tariff as most of them cannot afford to pay. Moreover, the high tariff is having an adverse impact on the industry and agriculture of Pakistan.

He said that the causes of the high power tariff were many like heavy payments made to the IPPs, increasing fuel prices, successive devaluation of the rupee and higher financial charges on the government lending to Wapda.

Wapda has suggested to the government that the reduction in power tariff is possible if it accepts its proposals which, inter alia, include additional gas supplies, capping of furnace oil prices, reduction in various surcharges. These measures can bring power rates down to a sustainable level and conversion of its excessive debt into equity. The experts maintain that these measures, if adopted, would have a positive impact on the tariff which could be passed on to the consumers without affecting the financial viability of the organization. The reduction can have a salutary effect on the economic growth of the country.

Four options have been made by Wapda to the government for reducing the power tariff. The first option is for a reduction of 88 paisa per unit which would have an impact of Rs20.264 million, the second option for a reduction of paisa 50 per unit would have an impact of Rs11.514 million and the third option is for a relief of 69 paisa per unit which would have an impact of Rs15.889 million.

In the first option, Wapda has suggested that an impact of about Rs20 billion can be mitigated if the GST is totally removed from un-protected categories of consumers, complete elimination of advance income tax on electricity bills, allocation of additional gas quota of 50MMCFD, capping of furnace oil at Rs10.000 per metric ton and gas prices at Rs125 per MCFI and swapping of the balance debt to equity by the government. The second option for providing relief of paisa 50 per unit with an impact of Rs11.5 billion has two alternatives; either the government gives the entire amount as subsidy to the electricity consumers or allows Wapda to have all the measures it has suggested in its first option with the exception of total removal of the GST from unprotected categories of consumers and elimination of advance income tax on electricity bills. Thus the second option has been divided in two options.

The third option with a relief of 69 paisa per unit and having an impact of Rs15.9 billion suggests all measures proposed in the first option and 50 per cent cut in the GST from unprotected categories of consumers instead of 100 per cent suggested in the first option.

The above impacts are in addition to the liabilities like providing power to Azad Jummu and Kashmir and the Karachi Electric Supply Corporation (KESC) from payments are either not received at all or partly received after long delays following great persuasion and negotiations.