ISLAMABAD, June 9: The National Electric Power Regulatory Authority (Nepra) on Wednesday reduced tariff for the consumers of Faisalabad Electric Supply Company (Fesco) by an average 50 paisa per unit with effect from July 1, 2004.

Nepra, however, did not reduce tariff for domestic consumers using below 300 units per month, saying they were already being provided electric power at subsidized rates.

The new tariff would now become a base Fesco tariff for five years that would be adjustable by Nepra from time to time on account of power purchases from National Transmission and Dispatch Company (NTDC) and inflation on account of operation and maintenance expenditures.

In its tariff determination, Nepra reduced tariff for residential consumers consuming more than 300 units per month by 26 paisa per unit, residential consumers of more than 1,000 units by 140 paisa per unit, 50 paisa for agricultural consumers, 78 paisa for industrial consumers and 144 paisa for commercial consumers.

The Nepra determination, the first of the series, has set the ground for a reduction in tariff of eight other distribution companies of Wapda, the sources said. The announcement came as a surprise for the government which was contemplating taking the credit for a tariff cut as part of the budget 2004-05 measure.

Nepra received telephone calls from the government functionaries as to why it had announced its tariff determination, sources said. At the current rate of 12 per cent system losses, the company has been asked to reduce line losses by one percent every year and the saving so achieved would become part of Fesco's profit.

The sources, however, said the tariff reduction for other companies would be lower as compared to Fesco because of their higher line loss situation. "The authority (Nepra) has found that since there is a large percentage of industrial and commercial consumers in Fesco area the present rates result in a revenue accrual which is more than the prudent costs.

Therefore, the average sale rate of Fesco has been reduced," the determination said. Fesco is in an advanced stage of privatization and its revised tariff was being considered as a major hurdle on the path of privatization.

The sources, however, said that the Privatisation Commission was expected to express its concern for such a big tariff cut. Nepra said it had considered the prudent costs of Fesco required to provide reliable service at the most economic rates.