ISLAMABAD: Amid a strong protest from consumers against 10 per cent increase in power tariff, the National Electric Power Regulatory Authority (Nepra) on Tuesday asked the government to review with the human factor in mind its proposed subsidy rationalisation plan that would cause additional burden to consumers.
At a public hearing presided over by Nepra Chairman Tauseef H. Farooqui, the Power Division insisted for immediate notification of Rs1.68 per unit increase in base tariff for all domestic consumers across the country, except those under 200-unit of monthly consumption, besides Rs1.39 per unit increase for all other consumer categories including commercial, general services, agricultural tube wells and residential consumers.
It said the decision would generate Rs168 billion additional to the power companies or reduce subsidy otherwise to be paid out of budget during the current fiscal year. A Power Division official said the revision would increase the average base power tariff from Rs13.97 per unit at present to Rs15.36 per unit after notification.
“We believe the government should protect consumers using up to 300 units per month for the time being,” said the Nepra chief, adding hopefully the government would be prepared for the political backlash. He said the subsidy payments fell in the government domain and the regulator had no say even if subsidies are totally withdrawn but “you should discuss this with the government once again to look into the suggestion keeping in mind the human factor”.
Additional Secretary Power Waseem Mukhtar said the regulator had already determined Rs3.34 per unit increase in base tariff in February this year which was notified by government which actually passed on Rs1.95 per unit increase to consumers and picked up Rs185bn as net subsidy. He said the remaining Rs1.39 per unit average increase was now being passed on to consumers to reduce subsidy payments.
He said the subsidy rationalisation had been started by the government to reduce cross-subsidy by economic sectors like industry and agriculture. He said the government could maintain existing subsidy for up to 300-unit consumption, otherwise high consumption categories would be further burdened.
Mr Mukhtar said the government was now protecting consumers only to the extent of 200 units per month. In doing so, he said the first 50 units (lifeline consumers) would be charged at Rs3.95 while another category of lifeline consumers – 51 to 100 units per month – had been created to be charged at Rs7.74 per unit. Consumers with 101 to 200 units would be charged at Rs10.06 per unit without any change and excluding taxes. All residential consumers above 200 unit threshold would face Rs1.68 per unit increase.
The tariff hike will be effective from Nov 1 and would be applicable to all Discos and KE.
The Power Division said about 45pc non-time of use consumers would remain protected. A Nepra case official said the increase was necessitated by higher capacity payments and exchange rate losses but some additional factors like the cost of Matiari-Lahore transmission line and Karachi Nuclear power plant II would follow in the shape of quarterly tariff adjustments.
Businessman Arif Bilwani strongly opposed the tariff hike and said the public hearing had clearly established that capacity payments was because of lower consumption besides system losses and lower recoveries and all this was because of poor planning of ministries of power and finance and inefficiencies of the power companies. Therefore, consumers should not be made to pay the cost of mismanagement.
Another businessman Moeen Fudda said circular debt was the key challenge because of mismanagement of the government and its departments. He said despite surplus capacity various parts of the country, including northern areas currently faced up to 20 hours of loadshedding because the government had not been able to overcome distribution and transmission problems.
Hafiz Naeem-ur-Rehman of Jamaat-e-Islami Karachi said the consumers using up to 300 units were being deprived of the subsidy. He said the government was still providing Rs74bn tariff subsidy to agriculture sector tube wells while power agriculturists were also not paying due taxes. “This feudalism should end now,” he said and demanded to know how much of this subsidy was going to large landlords and how much to poor farmers who really deserved subsidy. He said Nepra not to allow any further increase in tariff.
Energy Minister Hammad Azhar had already announced in October that the decision to increase base power tariff by an average Rs1.39 per unit was taken during a meeting with the World Bank management.
Published in Dawn, November 3rd, 2021