ISLAMABAD: The government has decided to put a freeze on electricity tariff for the remaining period of the current fiscal year owing to its inflationary impact on economy and unending loadshedding, according to a senior official.

“Let me assure you categorically that there will be no increase in electricity tariff during remaining months of the current fiscal year, except any adjustment to fuel prices to be determined by Nepra (National Electric Power Regulatory Authority),” Shahid Sattar, an Adviser of the Water and Power Ministry who heads the transition team on power sector reforms, told Dawn on Tuesday.

He said the impact of eight to nine per cent (Rs1.07 per unit) reduction in international fuel prices for November would be passed on to consumers in December bills. In his view, international oil prices, whether going up or down, would continue to be adjusted in the monthly electricity bills.

Under an agreement with international lending agencies, Nepra has been notifying the impact of fluctuation in oil prices to electricity consumers for more than a year, which are separately shown in power bills.

Asked how the power sector deficit would be bridged without increasing tariff, Mr Sattar said the financial gap would be covered through recovery of unpaid electricity bills from different consumers and efficiency measures. “The problem is not tariff, but non-payment,” he said, adding that power companies were not getting payments against electricity they sell.

Last month, the water and power ministry had requested the government to allow 15 per cent increase in tariff to meet full recovery of electricity costs as its power sector arrears had crossed Rs305 billion in November 2010.

Dr Nadeemul Haq, the deputy chairman of the planning commission heading the power sector reforms, was non-committal on electricity tariff, but agreed that if managements of power companies were sleeping and not collecting bills, it had nothing to do with tariffs.

Last month, the ministry of finance had put its foot down against a 15 per cent increase in power tariff until a full picture was presented by the minister for water and power to clarify where the revenue raised through about 95 per cent tariff increase in almost a year was going.

The finance ministry had contended that increased power rates were resulting in higher system losses and theft.

The political leadership also did not approve of increasing tariff fearing a backlash at a time of extreme energy shortages and when it was already facing stiff resistance in introduction of new tax measures and criticism for rising inflation.

Last month, the power ministry had reported total receivables of about Rs305 billion, including about Rs52 billion from Karachi Electric Supply Corporation, Rs125 billion from private consumers and Rs58 billion from four provincial governments and Rs35 billion tax refunds from tax authorities, besides federal agencies and some unpaid subsidies.