No one can deny the fact that the present back-breaking electricity tariff has played havoc with all sectors in Pakistan— be it industry, agriculture, commerce or even the social sector. Not even hospitals, schools and set-ups like orphanages have been spared. The domestic users on the other hand, are in a quandary and struggling hard to remain afloat in face of high electricity rates, which unfortunately are expected to rise further.

The chairman Wapda’s latest plea that the GOP may grant the utility a sum of Rs17 billion or be ready for a paisas 40 per unit increase is an indicator of the things to come. The reason for this preposition is the recent increase in fuel oil (FO) prices and the windfall garnered by the federal government in the shape of petroleum development levy (PDL) — which has accumulated over Rs70 billion against the estimated Rs48 billion.

The blatant misuse of the PDL’s charter is another sordid tale to tell — but needing separate space. On the other hand, the fact that the Utility’s CEO does not have any thing else to offer, but something which only GOP can do, further explains the paucity and the abject poverty of professionalism of Wapda’s higher management.

Similarly, Wapda’s constant complaints regarding ministry of finance’s (MOF’s) lack of help in the Rs33 billion recovery from the public sector receivables, while doing nothing to recover Rs27 billion from its private defaulters (up from Rs13.7 billion ending 97-98) is another fact worth looking into. Side by side are the strange sermons regarding OGRA’s true place, provision of cheap oil and gas by the GOP, doing away with the CBR levied GST on electricity usage, restructuring (National Electricity and Power Regulatory Authority (Nepra) to act as the Utility’s stooge and the expected ugly situation on GOP’s refusal to build oil reserves.

As to why Wapda cannot improve on itself is, however, never answered. All this is a non-professional management’s way to deflect people’s attention from its working. And with the impending WTO and 2005 in view, the poor electricity user does not know from whence would come any solace,specially when only competitively priced inputs can save the country from ruin. All in all it is a very sticky situation.

In this scenario, chairman Wapda’s forceful assertions that the electricity tariff only increased by 17 per cent since November 1998 i.e. from the time he and his troops took over Wapda — is most shocking. The Utility’s CEO and chairman further states that as against this meagre increase, the FO prices have jumped from only Rs5500 in 1998 to a high of Rs13,500 per ton late last year.

Actually by stating so he wishes us to congratulate him for not increasing the tariff by 125 per cent—equivalant to the increase in FO prices during the above period. As to what effect FO prices have on each unit of electricity produced, as to why cheaper production was relegated in favour of expensive IPP product, why Wapda’s own thermal power systems couldn’t be converted to the dual gas-fired mode during the last 48 months and why losses and receivables couldn’t be reduced, also conveniently remains unanswered.

The answer to this very cogent question is very simple, it is inefficiency and corruption galore. Furthermore, the present government’s resolve on assumption to ameliorate the lot of the people through reduction in electricity rates was met with stiff resistance first by the announcement on that very day of an increase by paisas 8 per unit as automatic tariff adjustment (ATA) and then the paisas 9 to 12 reduction — again under the ATA by Nepra. This was followed by the IMP led chorus about possible compromise of Nepra’s independence by accepting the prime-ministerial orders for reduction and then the regulator’s insistence that the paisas 9 to 12 reduction was never under the prime ministerial orders. So much for the present government’s resolve to arrange any reduction.

Here experts are of the opinion that the Prime Minister should have ordered Wapda to reduce the prices to which Nepra wouldn’t have any objections. The utility, thereafter should have off-set the effects of this reduction through in-house efforts. However, its transpires that Wapda is simply not ready to do anything of that sort- rather has come with the latest of its ploys viz pay-up Rs17 billion or be ready to an increase of paisas 40 per unit.

This time, Wapda asks for a share in the PDL windfalls available with the GOP. While the PDL’s obnoxious increase is indeed deplorable, Wapda’s stand too is inherently wrong as correctly castigated in Dawn’s editorial of 18th February 2003. As rightly pointed out, the utility’s salvation lies only in a professional management and the implementation of needed steps to decrease line losses, recover arrears or receivables and to beef up the presently stunted revenue collection. Similarly, the ballooning expenditure also needs to be curbed.

Leaving aside the above —aptly answered in my earlier articles — we would now proceed to specifically list the various tariff increases effected since November 1998 and the total effect this far. We would also see that the (only) 17 per cent increase incantation of the chairman Wapda is totally incorrect (see table).

The first of the many attacks on the un-suspecting Pakistani customer was the so- called tariff rationalization by Wapda during April, 99. This rationalization was totally irrational and effected a 17.39 per cent increase in Wapda’s revenue for the last quarter of FY 98-99. Strangely this step was linked to a 100 to 200 per cent increase in minimum fixed charges for the two-part tariff customer. This wrong doing was somewhat corrected by Nepra on 1.7.99 ,when this phenomenal increase was reduced.

A little scrutiny of what was then wrongly billed as a rationalization reveals that but for a small reduction here and there the main thrust remained revenue increase for Wapda in the shape of phenomenal increase in fixed or minimum charges and the tariff still retained it’s load suppression model without any effort to utilize the then great dip in average demand of about 1000 mw against the compatible figure for 1998 or to attract demand for the unsold 1000 mw to 2000 mw of power during the off-peak or the night time hours. All in all, it was nothing worth emulating and the fact quickly dawned leading to the umpteen increases thereafter.

It is also pertinent to state that the then PM had allowed a subsidy to the domestic user originally covering the FAS (fuel adjustment surcharge) up to 100 per cent, then pared to 50 per cent and lastly brought down to 25 per cent. Thereafter this FAS equalling paisas 7 to 75 in full was levied to the earlier subsidized sector of domestic consumers. This greatly added to the woes of the electricity customer, specially when at one time the PM’s subsidy, as it came to be known, covered 30 per cent of any domestic user, including to a lesser level, the so-called lifeline consumers in this category.

On the other hand the phenomenal collection of above 78 per cent from the public sector/ government against the 44.8 per cent during the FY 1997-98 leading to a total revenue of Rs123.8 billion coupled with an expenditure of only Rs85.6 billion for the FY 1998-99 (with only Rs43 billion going to the IPPs against 15 billion units purchase) did not warrant any more changes in the tariff rates.

Similarly FY 1999-00 also remained quite ambivalent and a respite-full year for the electricity customers. Come FY 00-01 and onwards and the whole rot starts. As a consequence as many as 13 tariff increases took place in the FYs 2000-01 and 2001-02. The accumulated effect of the same can be gauged from the fact that Wapda’s per unit sale rate of paisas 282 for the FY 99-00 catapulted to as much as paisas 430 for the FY 2001-02—an increase of 52 per cent.

The 15 per cent increase for the protected and unprotected categories of electricity consumers due to imposition of the GST is in addition to the above increase. We further see that the minimum fixed charges for the two-part tariff category of customers increased by 50 to 100 per cent. The last of the increase for FY 2001-02 was a hefty paisas 39 per unit against Wapda’s petition of March 2002 for a paisas 88 per unit increase. This alone is upwards of 9 per cent of the consolidated sale rate of paisas 430 per unit for the above financial year.

In order to further clear the issue it is seen that there were a total of 15 tariff revisions (excluding withdrawl of 30 per cent subsidy and imposition of the GST) approved by Nepra since march 1999. Interestingly, but sadly, the tariff increase announced by Nepra in July, 2002 was almost equal to the cumulative increase that took place during the last three years. In percentage terms, the increase granted by Nepra against this for domestic consumers averaged 15 per cent, industrial 9 per cent, commercial 1 per cent and agriculture tube wells by 18 per cent. So much for the misstatement that the tariff only increased by 17.1 per cent during the period November 98 till date.

Not only that, Wapda has also managed a paisas 8 per unit increase effective from 1.8.02 onwards. Where-after NEPRA’s ATA leading to a reduction between paisas 8 to 12 per unit was effected from 1.12.02 onwards. As a consequence, the cumulative increase in tariff excluding the effect of the then PM’s subsidy and the subsequent GST of 15 per cent levied from 1.07.1999 onwards is above 60 per cent.

This figure includes the pressure exerted on the tariff rates by the over 100 per cent increase in fixed/minimum charges for the two-part tariff customers like the agricultural tube-wells, industry and other bulk supply receivers. This increase alone contributes to above 40 per cent increase for the two-part tariff class converting to about 8-10 per cent increase in the total average tariff inclusive for all categories of connections.

Alongside the above increase is the 100 to 300 per cent increase in minimum charges for the domestic and commercial customers. In this case the rates increased from Rs 30 to 50 and Rs 90 to 100,and from Rs60 to 150 and from Rs200 to 500, which translates into an increase of 4.39 per cent for the tariff alone.

In case the effect of the then PM’s subsidy and the GST is also added to the tragedy, then we see that the electricity tariff on the average increased by a hefty/unprecedented figure of 75 to 100 per cent. Similarly, in case we consider Wapda’s revenue for FY 2001-02 as Rs186 billion as chairman Wapda would have us believe against the actual Rs153.5 billion, then the sale rate per unit for the FY 2001-02 comes out to be 515 paisas and in comparison to the same for FY 1997-98 when WAPDA’s revenue was Rs93 billion against the sale of 39.411 billion units; and the paisas 254 per unit sale price, the tariff rise increases by over 100 per cent - and this is again without the effect of withdrawn PM’s subsidy and the 15 per cent GST. Actually it is amazing to see the electricity customers surviving.