17 January 2005	Monday	06 Zilhaj 1425

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ISLAMABAD, Jan 16: A significant increase in electricity tariffs is expected during the current month owing to a rise in Wapda's fuel cost, high cost of power purchased from independent power producers and reduction in hydel-power generation, it is learnt.

Informed sources told Dawn on Sunday that the National Electric Power Regulatory Authority (Nepra) had asked Wapda companies, including the National Transmission and Dispatch Company (NTDC), to provide details of fuel-wise and quantum-wise increase in power cost during the July-December 2004 period.

Under the law, Nepra is required to revise power tariffs for all Wapda companies in January and July every year on the basis of the fuel adjustment formula.

Nepra sources said that the increase in power tariff would be part of the 'comprehensive power tariff review' that would take into consideration the impact of increase in furnace oil prices, reduction in hydel-power generation and non-notification by the government of power tariff determined by Nepra last month.

The sources said the government had asked Nepra to reassess the changed ground realities and re-determine the power tariff. They said the government did not reduce power rates as advised by Nepra in December because it involved over Rs68 billion subsidies.

The finance ministry had told the government that power rates were expected to increase again in the month of January as a result of automatic fuel adjustment and hence it would be politically imprudent to reduce tariffs in one month and increase it in the following month.

The Nepra sources said the power companies had already benefited from the government's policy of maintaining higher rates in the last six months against the reduction proposed by Nepra and this aspect would also be taken into account in the next revision which was now due.

The sources said that the power-mix had significantly deteriorated in the last six months owing to a higher than expected reduction in hydel-power generation as a result of overall water shortage and canal closures while the cost of thermal power had also increased as a result of higher furnace oil prices.

In this way, not only the cost of power generation has increased, but the quantum of thermal power production has also gone up. Besides, payments to independent power producers (IPPs) were also higher than the targets during the first half of the current fiscal year.

The sources said that Wapda companies and the NTDC had told Nepra that financial data for the period between July and December 31 would be provided to the regulatory authority early next week because it would take about 15 days to compile the relevant information.

The Nepra sources said the Nepra had put in place a well-defined formula for fuel adjustment and other factors and it would take about five-six days to finalize its determination so that the government could implement new power tariffs with effect from Feb 1.