ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) on Thursday was told by the government that an increase of Rs1.95 per unit would be applicable to all electricity consumers including lifeline consumers using 50 units per month.

The regulator had arranged a public hearing on a government request for application of uniform schedule of tariff for all distribution companies of ex-Wapda along with ‘targeted tariff differential subsidy of Rs185 billion” to ensure uniform tariff. The public hearing was presided over by Nepra Vice Chairman Saif Ullah Chattha and attended by remaining three provincial members.

A government team led by Additional Secretary of the Power Division Mehfooz Bhatti explained to the regulator that even though increase in power tariff at the rate of Rs1.95 per unit would also be applied to K-Electric, the request under discussion pertained to only distribution companies of ex-Wapda. This will generate about Rs200bn in additional revenue to Discos.

He said the proposed tariff increase was based on Rs1.687 trillion combined revenue requirement of Discos for 2019-20 already determined by Nepra in its separate determinations for various Discos.

No exception for lifeline power consumers

The regulator, he explained, had determined a consolidated tariff increase of Rs3.34 per unit. However, given the socioeconomic considerations, the federal cabinet has decided to pass on an increase of Rs1.95 per unit and provide a subsidy of about Rs185bn to bridge the remaining gap for tariff uniformity instead of about Rs144bn subsidy budgeted for the fiscal year.

The Power Division contended that Nepra laws required the regulator to determine a uniform tariff for distribution licencees wholly owned and controlled by common shareholders on the basis of their consolidated accounts. However, the regulator determined consumer end tariff for Discos on individual basis without consolidation of the respective revenue requirements.

It said the federal cabinet decided on Jan 15, 2021 that a revised uniform tariff increase of Rs1.95 per unit on the basis of consolidated revenue requirements of all Discos should be presented to the regulator along with targeted tariff differential subsidy of Rs185bn.

It said the inter-Disco tariff rationalisation was not aimed at raising any revenues for the federal government as it was within the determined revenue requirements of the Discos consolidated accounts. This is meant to meet socioeconomic objectives, budgetary targets, protection of low end consumers through subsidy and yet maintain uniform tariff across the country and regions for each consumer category. Responding to a question from participants as to why the consumers in Islamabad were being made through the uniform tariff to bear the cost of theft and inefficiencies in many other parts of the country, Mr Chattha conceded that existing socioeconomic policies of the government did not differentiate between good and bad power companies but this was a long-term objective to be achieved hopefully sometime in future.

Published in Dawn, February 5th, 2021