ISLAMABAD, Nov 8: The National Electric Power Regulatory Authority (Nepra) has proposed imposition of a new surcharge for consumers of profitable companies of the Water and Power development Authority to maintain electricity rates of loss-making companies in Sindh, the NWFP and Balochistan at the current level.
Sources told Dawn on Tuesday that the proposal was sent to the government a few days ago with an indicative power tariff for all distribution companies, which had to be announced by Nov 15 to meet a commitment with the World Bank.
If the power tariff was revised on cost of service basis, the government would need to extend about Rs33 billion subsidy to the companies in loss to maintain uniform rates across the country, a finance ministry official said.
He said the power rates of the Quetta, Peshawar, Hyderabad and Multan Electric Supply Companies had been estimated to go up by 2.5 to four per cent on actual cost of service basis because of their higher system losses. On the other hand, the tariffs for Islamabad, Lahore, Faisalabad and Gujranwala Electric Supply Companies had been estimated to reduce or remain unchanged in view of their comparatively low losses.
In view of the situation, Nepra has proposed that if the government is not willing to increase the tariffs for consumers in Sindh, Balochistan and the NWFP, a new surcharge should be imposed on profitable companies for injection into the loss-making ones.
The government had given a commitment to the World Bank mission last month to announce revised power tariffs for all distribution companies of Wapda by Nov 15 to pave the way for WB funding in the power sector in the next financial year.
The World Bank had earlier told Islamabad that it would not provide loans to power sector companies of Wapda unless they were made financially and administratively independent after announcement of their separate tariffs.
Currently, a uniform tariff is applicable to all Wapda companies.
The government has been facing difficulties in separating and revising the tariff because of political considerations.
The government has already been facing criticism for charging higher power rates from consumers in Karachi than those in the rest of the country.
Any big imbalance in power tariffs in different parts of the country could result in dislocation of industrial units and create many problems for the provincial governments, an official said.
The government has two options if it wants to maintain a uniform tariff: to provide subsidy or allow levy of a surcharge on profitable companies to subsidize those running in loss.
The government missed a Sept 30 deadline set by the World Bank for notification of revised power tariff.
It did not notify the tariff reduction determined by Nepra last year to provide a windfall benefit to the Wapda companies.
Last year, the separation of tariff of the companies was estimated to require about Rs68 billion in subsidy.
However, by maintaining a higher tariff than that determined by Nepra, the government has been able to reduce the factor to Rs33 billion.
Nepra has also asked the government to decide if it wants to reduce industrial power tariff to be competitive in the international market, and, if so, then by how much it wants to increase the tariff for residential consumers who are currently enjoying subsidy. Another crucial decision the government is required to take is whether it can increase the tariff for lifeline residential consumers living below the poverty line from the current Rs1.40 to about Rs2 per unit.
