CCoE extends flat tariff for industrial consumers till June 2022

Published April 16, 2021
The Cabinet Committee on Energy (CCoE) on Thursday extended the flat electricity tariff to industrial consumers without the application of expensive peak-charges despite concerns of the Power Division. — Reuters/File
The Cabinet Committee on Energy (CCoE) on Thursday extended the flat electricity tariff to industrial consumers without the application of expensive peak-charges despite concerns of the Power Division. — Reuters/File

ISLAMABAD: The Cabinet Committee on Energy (CCoE) on Thursday extended the flat electricity tariff to industrial consumers without the application of expensive peak-charges despite concerns of the Power Division.

Also it could not resolve a dispute between the power regulator and the Power Division over the future of about 100 Alternative and Renewable Energy (ARE) projects.

The meeting of CCoE was presided over by Minister for Planning, Development and Special Initiatives Asad Umar. The CCoE had abolished on Nov 2, 2020 the Time-of-Use (ToU) tariff scheme for industrial consumers. Under this, the peak and off-peak tariff structure was abolished only till April 30, 2021 and a review was to be carried out by March 31, 2021 for its continuation or otherwise beyond April 2021.

Informed sources said the Power Division had accordingly brought up the summary and reported that on average 21pc consumption growth had been observed during the November-February period, with a peak of 28pc higher consumption in February alone, with major consumption in B3 and B4 categories, and involved a total subsidy of Rs7.75bn.

“On a summary of a Power Division, the CCoE approved the proposal for the extension of ToU Tariff Scheme for Industrial Consumers from May 1, 2021, to June 30, 2022”, an announcement said, adding the package was originally approved in November 2020 and was set to expire on April 30, 2021.

The Power Division demanded that the scheme should be suspended for core months of May to September because it would require additional Rs26bn subsidy and would technically be unfeasible to continue with such high consumption patterns due to transmission and distribution limitations, especially when furnace oil and diesel-based plants may have to be utilised. In other case, there would be heavy loadshedding and trippings.

It suggested that the incentive could be brought back at the end of September to maintain healthy consumption patterns and better utilisation of resources. By the time generation and transmission would be optimised and enhanced consumption could be continued and sustained for many years to come.

During the meeting, some participants noted that the momentum of industrial production should be supported to continue as it had in recent months shown healthy output numbers. It directed the provision of additional Rs26bn subsidy along with its timely disbursement to ensure furnace oil and LNG supplies in peak summer season. The power authorities were also asked to ensure system stability.The CCoE also looks up another summary of Power Division wherein it was proposed that the National Electric Power Regulatory Authority (Nepra) may be directed to withdraw the generation tariff and licences awarded to category–III RE projects as their determinations were not consistent with the approved policies in the matter.

The power division complained that Nepra had been issuing cost plus based tariffs and licences to ARE projects even though the CCoE had directed in February and August 2019 that all such projects that had not acquired tariff and generation licence from Nepra prior to the date of the said CCoE decisions were placed under Category-III and were to be allowed to proceed ahead subject to becoming successful in the competitive bidding process.

These directions were conveyed to Nepra which did not accept and noted that only decisions of Council of Common Interests (CCI) were binding on such matters. The CCI in its final decision while approving the ARE policy 2019 in August 2020 upheld the CCoE decisions, the Power Division reported.

The Power Division complained that at least six ARE projects out of a list of over 100 in the so-called Category-III were given tariffs even after the August 6 decisions of the CCI. This would lead about 97 similar projects having generation capacity of 6,060MW to litigation who have not been able to secure tariffs in the absence of bidding while their six counterparts succeeded. The CCoE referred the matter to the Law Division for legal.

Maritime Affairs Division presented the report on the progress on the establishment of two new LNG terminals at Port Qasim, Karachi. The meeting was informed that the sub-committee headed by Ministry Maritime Affairs was holding regular meetings to facilitate the process of establishment of new terminals.

The meeting was attended by Minister for Energy Omar Ayub Khan, Federal Minister for Maritime Affairs Abdul Razak Dawood, Adviser to the Prime Minister on Commerce & Investment, Special Assistant to PM on Power Revenue and official of various Ministries/Divisions.

Published in Dawn, April 16th, 2021

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