A huge increase of four percent in the power tariff is expected within the next 48 hours to help the government save Rs 15 billion per year under the power differential subsidy, a move that will further burden consumers.
An official source told Pakistan Today that the notification for increase in power tariff was ready for promulgation and the only delay was the approval of the prime minister, who was said to have tacitly given a go-ahead earlier. A summary for increase in power tariff was earlier sent to the premier for approval but he directed the ministry to get approval from the ministerial committee on energy issues.
“We are awaiting an official communication from the prime minister to notify the increase in the power tariff,” the official said. It has been learnt that the prime minister had agreed to allow an increase of four percent in the tariff. The permission from the prime minister was sought as the increase is likely to cause a political backlash to the government under the current political scenario. Another increase of 10 percent in the power tariff will be made in the coming months to offset the estimated Rs 40 billion tariff differential subsidy during the current fiscal year. To completely reduce the tariff differential subsidy, the government plans to ensure full cost recovery by increasing the power tariff by 14 percent during the current fiscal year. This will allow complete offset of tariff subsidy by the start of the next fiscal year.
The government is under immense pressure from international financial institutions to eliminate the subsidy to get $2 billion in assistance for power sector restructuring. The financing is required to upgrade the power transmission and distribution network, which has massive and chronic line loss issues that amount to 24 percent of the total production. The tariff for domestic consumers using 1-100 units per month will increase by 17 paisas per unit, followed
by 26 paisas for consumers who use 101-300 units, 43 paisa for consumers who use 301-700 units, 53 paisas for consumers who use more than 700 units, and the tariff for peak rates will increase by 49 paisa per unit and 27 paisa for off-peak hours. The tariff increase for commercial, industrial and agriculture consumers is within the same range, sources said. The source said there was no need to send the notification to the Law Ministry for vetting as there was no legal issue involved and the government had already tabled a bill in parliament to empower the National Electric Power Regulatory Authority to directly notify tariffs for distribution companies.
4% power tariff hike on the cards
