March 4, 2003	Tuesday	Zul Hijjah 30, 1423

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ISLAMABAD, March 3: The power rates are likely to increase by at least 3 per cent (around 12 paisa per unit) as a result of quarterly fuel-based tariff revision due on March 16.

Total increase as estimated by the Wapda authorities should not be less than 45 paisa per unit since furnace oil prices have increased from Rs10,371 per ton on Dec 16 to Rs15,575 per ton as of now, a Wapda official told Dawn.

But the National Electric Power Regulatory Authority cannot pass on the impact of fuel oil price to end-consumers more than 3 per cent of the total average tariff under the existing rules, a senior Nepra official said.

In case the impact of fuel oil was higher than 3 per cent, Nepra is required to stagger it over the next quarterly review, he said. “This is really a quandary for both the government and Wapda,” he added.

The fuel prices are beyond the utility’s control and it cannot bear the additional burden on its own, the Wapda official said.

“Wapda is entitled to pass on the full burden of fuel oil to the consumers under the automatic tariff adjustment formula approved by Nepra although Wapda has been objecting to it,” said the Wapda official.

Wapda sources said the government would have to share the additional burden because the fuel prices were still going up in the international market and the utility could not carry through its fuel-based burden for another three months.

Nepra sources said the government would have to take a decision whether or not to pass on the full impact of fuel rates to the consumers. Amendment to the relevant rules would not be a problem then, they said.

Wapda Chairman Zulfiqar Ali Khan has already taken up the matter with the ministry of finance. Under pressure from the donors to meet certain financial targets, the Wapda chief had told the finance ministry last month that more than 40 paisa per unit increase in power tariff would be unavoidable if it was not provided a budgetary support of around Rs17 billion.

Wapda believes that since the new political government is not in favour of effecting an increase in electricity price as required to offset the additional burden, the federal government must make arrangements to take the responsibility of the financial gap.

Nepra had reduced Wapda tariff by 12 to 19 paisa per unit in December as a result of reduction in international oil prices.

The Nepra determination had taken furnace oil at Rs11,406 per ton on October 2, 2002, to Rs10,437 per ton on December 16, 2002. Since December 16, 2002, the furnace oil rate has increased by around Rs5,500 per ton and is expected to go up further before the quarterly review due on March 16.

A Rs1,000 per ton increase in furnace oil price has a revenue impact of Rs3.5 billion on Wapda over a period of three months and required an average 15 paisa per unit increase in consumer tariff.