KARACHI: The prospective owners of the Karachi Electric Supply Company (KESC), M/S Al Abaraj, have linked their takeover of the utility with an Rs3 increase in the electricity tariff.

If accepted, the hike will almost double the electricity bills of consumers - potentially sparking public protests - sources said on Friday.

It may be pointed out that after the government’s decision to withdraw subsidies, the utility levied 16 per cent General Sales Tax (GST) on industrial and domestic consumers, charged 10 per cent income tax if the amount of the bill exceeded Rs20,000 limit, while the National Electric Power Regulatory Authority (Nepra) allowed another 15 per cent raise from July 1.

But the Dubai-based firm is demanding a higher increase and according to sources, they have received a sympathetic ear from the government.

They are attaching great significance to a statement of the federal minister for water and power in which he had asked the nation to be ready for another tariff-hike in view of the rising cost of fuel.

Another demand of the Dubai-based prospective managers of the KESC is that payment of the existing dues of the company should be rescheduled and the amount should be decreased.

In fact they are also asking for a waiver and insisting on pool rate for the tariff charged by the Pakistan Electric Power Company (Pepco). The Pepco is charging Rs12 per unit for thermal power supply to the KESC. Computed on this basis the outstanding dues against the KESC are around Rs40 billion.

It is worthy to note that power supply to the KESC is generated through hydel and thermal power facilities. Hydel power is very cheap and if the pool rate is applied, the outstanding dues will scale down to Rs15 or Rs16 billion.

In view of the political and economic fall-out of meeting the demand, there is strong resistance against such moves but the federal minister seems to be sympathetic towards the prospective KESC managers who cannot take over the company officially before Nov 29, 2008, the day when three years restriction on Al Jomaih for not selling its shares in the company will become ineffective.

For the benefit of the public breakdown of tariff, applicable from March 1, 2008 and prior to the imposition of GST, income tax, and 15 per cent increase allowed by the Nepra from July 1.