ISLAMABAD, July 16: The National Electric Power Regulatory Authority (Nepra) on Friday reduced tariff by 48-90 paisa per unit for industrial and agricultural consumers of Hyderabad, Peshawar and Quetta power supply companies.

It has also asked the federal government to pick up Rs14.1 billion per annum subsidy as a result of this reduction in power tariff so as to maintain uniform rates across the country. As such, the government will have to inject Rs1.174 billion per month in three companies.

Nepra said: "The rates for industrial and agricultural consumers in the jurisdiction of three Discos (distribution companies) have been lowered so as to bring them on a par with the recently-announced reduction allowed to the five Discos in Punjab."

Rates for residential consumers using up to 300 units and commercial consumers using up to 100 units in a month have been maintained at their existing level.

As such, the industrial tariff has been cut by 89 paisa for B-1 consumers, 70 paisa per unit for B-2 consumers, 80 paisa for B-3 users and 90 paisa per unit for B-4 industrial consumers. Similarly, the agricultural tariff has been reduced by 48 paisa per unit.

The new rates will be effective from the date of gazette notification. The reduction has been allowed to avoid any adverse economic and social welfare impact due to disparity in the rates of industrial and agricultural consumers between the areas served by the eight ex-Wapda Discos covering all the four provinces, except Karachi that is served by the KESC.

Nepra conceded that with the new rates, the three companies (Hesco, Pesco and Qesco) will not be able to generate adequate revenues to cover its costs for operation and service expansion.

Because of this reduction, the annual revenue gap of Hesco is estimated at Rs5.704 billion, followed by Pesco at Rs4.890 billion and Qesco at Rs3.493 billion. As such, the government would provide Rs1.43 per unit subsidy to Hesco, 90 paisa per unit to Pesco and Rs1.08 per unit to Qesco. This translates into Rs14.1 billion annual subsidy.

Nepra also quoted four major reasons for wide difference between revenue requirement and total annual revenue. First, high percentage of consumption in the lower rates (cross subsidised) category such as residential consumers consuming less than 300 units a month and agricultural consumers.

Second, low load density requiring extensive distribution system such as rural areas of Balochistan and Sindh and major portion of consumers located in rural areas.

Third, the law and order situation specific to the area creating difficulty in availing effective and timely assistance from local administration to prevent pilferage and ensure disconnection of defaulting consumers. Consequently, there are higher level of losses as compared to other Discos where consumers are generally law abiding such as those in Iesco and Lesco.

With the determination of independent tariff for Hesco, Pesco and Qesco, Nepra has completed the independent tariff setting for all the distribution, transmission and distribution companies of Wapda.