ISLAMABAD: Despite strong opposition from consumers, the power division and the power regulator did not budge from increasing national uniform electricity tariff by up to 26pc (Rs7.5 per unit) with effect from July 1, 2023 as committed to the International Monetary Fund (IMF).

At a public hearing presided over by National Electric Power Regulatory Authority (Nepra) Chairman Tauseef H. Farooqui, trade and industrial bodies, mostly from Karachi, protested over such a massive price hike, saying the industry was already at its last leg of survival and the additional burden would lead to closure of businesses, wipe out export market as products become uncompetitive and add to the employment losses.

The flabbergasted consumer representatives, one after the other, expressed their anger in a language that the Nepra chief had to intervene with repeated requests to convey their feelings in a professional manner and appropriate words.

Despite repeated calls from various trade bodies and Nepra members for the power division and its subsidiary Central Power Purchasing Agency (CPPA) to make up an economic case to justify tariff increase, the government team kept on reiterating that National Electric Power Policy 2021 provided for tariff adjustments based on various parameters including socio-economic objectives and budgetary targets.

The government team also ins­is­ted that the average tariff had already been determined by the regulator itself based on various factors in the cost of electricity services including currency dep­re­ciation, capacity payments, inf­la­tion and so on.

The governm­ent, they said, had only introduced the element of subsidy and cross subsidy to protect residential consumers in the lower consumption levels.

Up to Rs7.5 per unit increase to be effective from July 1, as per commitment with IMF

The public hearing was informed that on top of the Nepra determined average national tariff, the government had exempted 63pc consumers in residential consumers from any tariff increase by not only providing Rs158bn subsidy but also cross subsidizing others by increasing rates for those with higher paying capacity.

The power division representatives claimed that 98pc of domestic consumers would continue to enjoy subsidy of varying degree.

In addition of Rs158bn subsidy for Discos, the hearing was told that Rs298bn subsidy would also be given to K-Electric to ensure uniform rate across the country.

The power division reported that the government had provided Rs736bn subsidy to KE in three years. The total power sector subsidies for current year had been budgeted at Rs976bn to keep it a going concern.

Mr Farooqui observed that the regulator had worked out an average increase of Rs4.96 per unit in national uniform tariff but the government increased this rate to Rs7.50 per unit for domestic consumers using more than 400 units per month and all other categories like commercial, industrial including export oriented sector.

As such the end rate including surcharges and taxes would go beyond Rs56 per unit for some categories and even cross Rs60 per unit with inclusion of quarterly tariff adjustments and fuel adjustments.

It was explained that electricity rates for protected categories to the extent of 200 units per month would remain unchanged while the rate for unprotected consumers would go up by 21-22pc.

The rate for first 100 units consumption would increase by Rs3 per (22.26pc) to Rs16.48 per unit while that of 101-200 units would go up by Rs4 per unit (21pc) to Rs22.95 per unit.

Similarly, rate for 201-300 unit per month would increase by 22.6pc (Rs5 per unit) to Rs27.14 while it would go up by Rs6.5 per unit for consumption of 301-400 units a month. The rate for residential consumers above 401 units and commercial, industrial and others would increase by Rs7.5 per unit or about 21-22pc.

The new rates following rubber stamp from the regulator within a couple of days would become effective from July 1 for all the distribution companies of ex-Wapda to generate Rs476bn additional revenue during the year. The new rates would also be applicable to K-Electric consumers.

All-Pakistan Textile Mills Association (APTMA), Karachi Chamber of Commerce & Industry (KCCI), Korangi Association of Trade & Industry (KATI), Arif Bilwani, Jamaat-i-Islami leader Hafiz Naeem-ur-Rehman and other consumers opposed the increase and demanded measures to address surplus capacity consumption, reduction in losses and other inefficiencies, capacity payments etc to address the root causes rather than crucifying the honest consumers, the middle class, the general industry and the export sectors.

It was highlighted that outstanding receivables from consumers stood at Rs2.32 trillion as of April 2023 which meant the distribution companies were failing in their responsibilities and adding its burden to existing paying consumers.

The circular debt had gone beyond Rs2.56tr but the government had chosen the easiest way to overburden middle class consumers and industrial sector and soon there would be no-one left to generate funds for even subsidy or the cross subsidy.

The interveners also protested over the revenue-based loadshedding, saying the power companies were resorting to this practice because of huge non-recoveries instead of improving their performance.

The regulator promised that a formal judgement would be made within a couple of weeks to end the practice of collective punishment.

Published in Dawn, July 25th, 2023

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