ISLAMABAD, April 28: The federal government has decided to subsidize consumers of the loss-making power distribution companies through budgetary support to keep their tariffs on a par with those in force elsewhere in the country, Dawn has learnt.
The policy committee on power sector met here on Wednesday with Water and Power Minister Aftab Ahmad Khan Sherpao in the chair to review the latest situation on the power-sector reforms programme.
An official said that technical and financial details of the decision were still being worked out which would be sent to the cabinet for approval in the last week of May. The meeting, attended by Wapda and Nepra top brass, was informed that the process of tariff determination of all distribution companies and generation companies of Wapda would be completed by next month.
A senior government official told Dawn that Nepra had already determined the tariffs of two companies - one generation and one transmission. The tariffs of other 10 companies would be finalized before May 15.
The official had no idea as to the size of the subsidy as he said this would be known once Nepra determined the companies' tariffs. Hyderabad, Quetta and Peshawar electric supply companies would require big amount of subsidies because of their high losses.
Under the power sector reforms, the government has to introduce separate tariffs for all the distribution companies. Previously, there was a proposal to take a part of profit from the profit-earning companies and use it as an equalizing factor for the loss-making companies but it was shelved, the official said.
Sources said the Punjab government had refused to accept this proposal on the ground that consumers in the province would not bear the burden of loss-making companies in other provinces on any legal, moral or constitutional principle if the tariff of all the companies was to be separated on legal and technical grounds.
Five distribution companies in Punjab, namely, Lahore, Faisalabad, Islamabad, Gujranwala and Multan, are either in profit or at break-even, although their line losses are still very high.
The policy committee would review the restructuring of Wapda companies from policy and management aspects on Thursday when officials of the Private Electric Power Company would give presentation on separation of assets and liabilities of corporate companies of Wapda.
Pepco is an umbrella company to oversee the restructuring process of Wapda that would lose its existence once corporate companies of Wapda became completely independent. All the distribution companies would have their separate electricity rates when Nepra releases its determinations on their tariff petitions next month.
Nepra determinations would give justifiable tariff under its tariff formula and thus the rates would vary from company to company on the basis of their loss situation and might be higher in Quetta and Sindh. The process of tariff determination would start with Faisalabad Electric Supply Company (Fesco) for being on priority of the privatization list.
