ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) is expected to pass on about 50 paisa per unit increase in electricity rates to all consumers of the distribution companies (Discos) after a meeting of the Economic Coordination Committee (ECC) of the cabinet did not take a formal decision on the issue.

The 50 paisa per unit increase in tariff for all consumers will address the challenge of about Rs2.42 per unit increase for domestic consumers of up to 300 units and private agriculture consumers during the current month and Rs2.86 per unit increase next month because of cumulative impact of fuel price adjustments (FPA) for about eight months.

The meeting of the ECC presided over by Adviser to the Prime Minister on Finance and Revenue Dr Abdul Hafeez Shaikh approved Rs252.38 million legal fee on account of Karkey arbitration and exemption of taxes and duties on procurement of micron sprayers against locust attack.

The power ministry had moved a summary to the ECC, saying that under the law and monthly fuel cost adjustment (FCA), Nepra had already determined details of the actual fuel charges etc for the months of November 2019 to June 2020.

Nepra notified the FCA for Nov 19 to June 20 on Aug 7 for passing on to consumers in two months (August and September 2020). Under the determination, the FCA rate in the billing month of August 2020 was set at Rs2.4228 per unit (for domestic consumer up to 300 units and private agriculture except lifeline) and Rs1.1711 per unit increase for other consumer categories.

Likewise, the FPA rate in the billing month of September 2020 was worked out at Rs2.86 per unit (for domestic consumer up to 300 consumption & private agriculture except life-line) and Rs1.1 per unit (fir other consumer categories). The total impact of this adjustment was worked out at Rs17bn cash shortfall due to delay in charging of the FCA.

This increase was approved after a freeze on electricity tariff imposed by the federal government came to an end on June 30, 2020.

Some members of the ECC observed that such an increase in power tariff for domestic consumers of lower categories of up to 300 units at this stage would be politically challenging, given the ongoing flooding and post-Covid economic conditions. Others were of the view that such a decision should not have come to the ECC in the first place because the cabinet freeze had come to an end and the FPA was a domain of the Nepra, which should have taken a decision. The power division, therefore, withdrew its summary from the ECC.

Informed sources said Nepra had separately informed the government that a windfall on account of fuel supply was imminent. An across-the-board adjustment of Nepra determined FCA by also including consumers, not entitled to relief but required to bear the higher impact, would result into a 50 paisa per unit increase for all the consumers across the board.

For this, the power division would write a letter to the regulator for condonation of procedural requirements. Nepra would then issue a fresh notification for about 50 paisa per unit increase for all consumers.

After this one-time adjustment, the monthly fuel price mechanism would get back to normal monthly routine with effect from October 2020 on real-time basis to end consumers in their monthly bill as and when notified by Nepra.

The meeting was also given an update on the issue of the Roosevelt Hotel but not substantial discussion could take place when pointed out that the main stakeholder – the secretary Aviation – had not been invited to the meeting.

Dr Shaikh directed that the issue should be handled in a fair and transparent manner and in the best national interest.

“He directed that all stakeholders, including the secretary Aviation, should be included in every discussion and negotiation related to the issues of the Roosevelt Hotel,” an official statement said, adding that Mr Shaikh had directed that “it should be made clear to all that in this transaction, all matters shall be resolved in a manner that is only in favour of the country and not benefitting any individual or party”.

The ECC approved the technical supplementary grant equivalent to Rs252.3m for the discharge of liabilities related to M/s Karkey arbitration. The meeting also allowed procurement of 83 X Micron sprayers for anti-locust operation by the National Disaster Management Authority with a special exemption of taxes and duties of import.

On a proposal pertaining to the taxation issues related to the telecom sector, the ECC decided that proposal might be submitted in the next meeting after thorough deliberation of its impact on already in vogue taxation policies, by FBR, Ministry of Commerce and Ministry of Industries

Published in Dawn, August 28th, 2020