Govt imposes 2% surcharge on power tariff

Acting on diktats of international financial institutions, the federal government imposed on Friday an additional surcharge of two percent on the power tariff with immediate effect from May 6. An official source said the surcharge would be applicable to all consumers other than lifeline consumers. The government had earlier imposed a two percent surcharge on power tariff for one month on March 15. The government wanted the surcharge implemented from April 15, but vetting officers at the Law Ministry overruled the demand, saying that it could not be implemented from dates already past. However, it was decided that the notification of the surcharge would remain applicable till June 30.
The surcharge would help generate Rs 3 billion more during the remaining 40-plus days of the current fiscal year. An increase of 8 paisas to 30 paisa per unit would occur in various consumer slabs, the source said. The government had made a commitment with the International Monetary Fund (IMF) team in March that the power tariff would be gradually increased by 6 percent during the current fiscal year to bridge the gap between the determined and notified tariff. Increase in the power tariff was an important benchmark agreed upon with the IMF that will provide Pakistan with a breather during the week-long talks with the IMF in Dubai starting May 11.
The government opted for the surcharge as it has already passed on the determined tariff by the National Electric Power Regulatory Power (NEPRA) to the consumers. The regulator determines different tariffs for each distribution company (DISCO) but the government implements a uniform tariff based on the lowest determined traffic for any DISCO. NEPRA had determined average tariff of Rs 9.57 per unit while the applied tariff was Rs 8.42 per unit. The government is under pressure to abolish the gap to make the power sector financially viable. About the tariff increase next year, the source said their consultants were working on the proposals and it would be finalised in the next few weeks. A report in a local English newspaper earlier had said that a 15 percent increase in the tariff was likely next year, which turned out to be inaccurate.