Government withholds notification: Power tariff cut
By Khaleeq Kiani
ISLAMABAD, Nov 23: The federal government has decided not to notify power tariff for eight distribution companies of the Wapda owing to Rs68 billion subsidy involved in such a dispensation.
The tariff was determined by the National Electric Power Regulatory Authority (Nepra) recently.
A senior government official told Dawn on Tuesday that the issue of subsidy and uniform tariff for the whole country has become so complicated that the government could not meet its deadline to inform the International Monetary Fund (IMF) about its decision and had to forego the last tranche of the $1.47bn under Poverty Reduction and Growth Facility (PRGF).
The government was required to convey its decision on revised power tariffs to the IMF at least 20-days ahead of its scheduled board meeting in the first week of next month, he said.
The official said the federal government was in contact with all the distribution companies to challenge the Nepra determinations and would be filing formal review petitions to Nepra within a fortnight.
He said the Water and Power Ministry has received all the eight detailed tariff determinations from Nepra in the last two days and was examining its legal and financial implications.
He said a focal point has been designated in the power ministry with the task to coordinate with all the Discos and ascertain whether their cash flow requirements have been met by the Nepra determinations.
He said the Multan Electric Power Company (MEPCO) has already informed the Federal Government about its reservations over the tariff determinations and others are expected to follow.
Once responses from all the Discos are received, the Nepra would be asked to review its determinations. He said the government could file review requests to the Nepra within 30 days of the receipt of the detailed decisions.
Under the revised determinations of Nepra, the average tariff for various companies of Wapda ranged between Rs3.72 per unit to Rs4.27 per unit. The average tariff determined by the Nepra for Faisalabad stood at Rs3.72 per unit, Rs3.75 for Lahore, Rs3.76 for Gujranwala, Rs3.77 for Multan, Rs3.78 for Islamabad, Rs3.80 for Quetta, Rs3.91 for Peshawar and Rs4.27 for Hyderabad Electric Supply Company.
The sources in the water and power ministry said Nepra provided short orders on all tariff determinations to the federal government early this month. A number of meetings of the ministries of Water and Power and Finance and the Prime Minister secretariat carried out a number of exercises to see as to how a uniform tariff could be maintained throughout the country.
Finally, the sources said, Prime Minister Shaukat Aziz decided not to notify the revised tariffs in a haphazard manner to avoid complications in future and decided to wait for the detailed determinations from the Nepra.
The sources said the government considered a minimum possible tariff for all distribution companies, examined the amount of subsidies involved and reached to the conclusion that a subsidy of up to Rs68 billion would be required to maintain a uniform tariff.
The government was also not satisfied with the level of 15 per cent system losses allowed to be charged from the consumers of all the Discos. The Islamabad Electric Supply Company was also allowed 15 per cent losses despite the fact that its actual losses were not more than 10 per cent.
On the other hand, companies like Quetta, Hyderabad and Peshawar were also allowed 15 per cent losses, although their actual losses were up to 40 per cent, he explained.
The government has allocated an amount of Rs51 billion for subsidies in the federal budget 2004-05 and hence its hands were tied to provide more than Rs68 billion subsidy to power sector consumers alone.
The government has already issued policy guidelines to Nepra on the request of multilateral lenders to set power tariffs on the basis of cost of service that meant that all Discos would have separate tariffs.
The official said the government was already under criticism for two power tariffs - one for Karachi and another for rest of the country - and hence it could not afford to fix separate tariffs in different provinces and regions.
In such a case, tariff for five Discos in Punjab would be lower than rest of the three provinces. The government wants to maintain a uniform tariff through subsidies till 2010, even though the Nepra is required to announce separate tariffs for all the companies.
