Govt weighing options to give further relief in electricity bills: Miftah

Published August 26, 2022
<p>Finance Minister Miftah Ismail (centre) addresses a press conference in Islamabad on Friday. — Photo via Ministry of Finance Twitter</p>

Finance Minister Miftah Ismail (centre) addresses a press conference in Islamabad on Friday. — Photo via Ministry of Finance Twitter

Finance Minister Miftah Ismail said on Friday that the government was weighing options to provide further relief to people burdened by high electricity bills.

Prime Minister Shehbaz Sharif has formed a committee to deliberate what relief can be given to people using between 200 and 300 units of electricity per month, he said while addressing a press conference in Islamabad.

Ismail said there were two reasons for higher electricity bills — the increase in tariff in line with the International Monetary Fund’s (IMF) condition and expensive electricity generation combined with higher temperatures in May.

“Our anticipated charges were Rs6 [per unit] but actual charges were around Rs100 because coal became very expensive and gas [prices] were the highest on record. May was very hot. There was a day when electricity demand rose beyond 30,000 megawatts. We generated 25,000MW which was the maximum we can.”

The minister said the government had activated all power plants to meet the increased power demand, including a furnace oil plant in Jamshoro that had a variable cost of Rs69 per unit.

“The temperatures [in May] were five to seven degrees Celsius higher than usual,” he said, adding that the increased power generation was more expensive because of higher spot rates in March and April.

The Power Division sent a summary to the National Electric Power Regulatory Authority (Nepra) in June, following which hearings were held and the regulator granted approval to include fuel charges adjustment (FCA) in July, he explained. Consequently, the FCA was included in the bills for that month, he added.

The prime minister was very “worried” about the impact of the charges on small consumers, Ismail said. He added that the Power Division, after discussions, had informed the IMF the government would remove FCA on those using less than 200 units.

“The government will lose Rs20-21 billion from this. We have removed FCA on 56 per cent of consumers.”

The minister further said that those who had not paid their bills yet would be issued corrected ones while those who had paid them would have the amount adjusted in their bills for September. In addition, the government had changed the last date for paying bills to August 31, he said.

In response to a question, he said the government had not bought excess fuel to produce electricity and the demand in May had been high. “For every 1°C rise in temperature, we need 800MW of additional electricity.”

On Wednesday, Minister for Power Khurram Dastgir announced exemption from FCA for those consuming up to 200 units, claiming benefit to 17 million users at a cost of Rs22 billion to the national exchequer.

Last month, the Nepra allowed distribution companies to charge an additional Rs155bn to compensate for the higher fuel generation cost in June.

The authority allowed an unprecedented FCA of Rs11.37 to K-Electric and Rs9.89 per unit to electricity distribution companies previously owned by Wapda, or Discos.

The government had also announced an increase of Rs7.91 per unit in the average base tariff across the country in three phases starting with effect from July. It had approved a Rs1.55 per unit increase in the base tariff across the country under a quarterly adjustment.

IMF and other funding

During his presser today, Ismail said the IMF’s Executive Board would meet on the night between Aug 29 and 30 and would approve the loan tranche for Pakistan. “We have completed all requirements,” he reiterated.

The minister refuted rumours that the government was planning to sell Roosevelt Hotel in New York, which is owned by Pakistan International Airlines, or the airline itself to Qatar.

The Gulf country was primarily interested in leasing Pakistan’s airports for long term and managing them, constructing terminals at ports, LNG plants and large-scale solar farms, he shared.

He welcomed Qatar’s announcement of investing $3bn in Pakistan, saying that with the amount, Pakistan had collected $5bn in funding compared to the IMF’s demand of $4bn.

Responding to criticism from PML-N leader Abid Sher Ali for his “anti-people policies”, Ismail said the country needed $40 billion to deal with its current account deficit and debt repayments.

“We did not have that amount and we could see default [looming]. It was necessary to save the country from default. I ask Abid Sher Ali and all my brothers to tell me of any decision I took that Shehbaz Sharif did not agree with.

“If petroleum levy or FCA are imposed, it is done so with PM Shehbaz’s permission. It is easy to criticise me but everyone knows [the facts].”

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