Rather than benefiting consumers, the government and regulators have decided to settle all outstanding gas receivables and electricity circular debt against lower international fuel prices.
On Friday, the National Electric Power Regulatory Authority (NEPRA) approved a reduction of Rs 2.62 per unit in fuel price of electricity tariff but decided to withhold 76 paisa per unit to recover Gas Infrastructure Development Cess (GIDC).
As a consequence, NEPRA allowed Rs 1.86 per unit reduction in tariff on account of monthly fuel adjustment for April. This reduction would not be available to consumers using less than 300 units a month as the government felt these consumers were already getting subsidised electricity.
According to a report in the local media, the government has committed with the International Monetary Fund to ensure recovery of Rs 145 billion from consumers on account of GIDC during the outgoing fiscal year and wipe out power sector circular debt in three years through tariff adjustments.
At a public hearing presided over by NEPRA Chairman Tariq Sadozai, the regulator allowed electricity companies to about Rs 11 billion GIDC arrears in installments from the power consumers. The recovery of GIDC imposed in last year’s budget had been stayed by various high courts on different grounds and finally cleared by the Supreme Court.
The Central Power Purchasing Agency (CPPA) requested NEPRA to reduce power tariff by Rs 2.62 per unit on account of fuel adjustment for April. NEPRA noted that it was an appropriate time that recovery of GIDC adjustment be made in consumer tariff as lower fuel prices would help reduce electricity cost. Therefore, it imposed 76 paisa per unit GIDC on gas to be used as fuel by power producers to recover Rs 11 billion in installments in April, May and June that would be made part of bills for August and September.
The remaining relief of Rs 1.86 per unit would be passed on to consumers in the billing month of August. The rate cut will not apply to K-Electric consumers.
