CENSORED
By Khaleeq Kiani
ISLAMABAD, Dec
26: Under an agreement with the International Monetary Fund, the government on
Friday increased power tariff by imposing 60 paisa per unit ‘equalization
surcharge’ – third in as many months – on electricity rates for all
distribution companies (except K-Electric) with immediate effect.
As a consequence, the existing
notified tariff at Rs11.82 per unit has been increased to Rs12.43 per unit. In
addition, this will have a further impact of 10 paisa per unit when charged to
consumers with general sales tax.
“The federal government is
pleased to notify the equalization surcharge at the rate of Rs0.60/KWh,
applicable to all the consumer categories except lifeline consumers on per unit
consumption in respect of ex-Wapda Distribution Companies”, said an official
notification not made public.
On October 3, the government
had imposed an equalization surcharge of 30 paisa per unit, followed by Rs1.50
per unit on November 3 to cover interest payments to Independent Power
Producers for delayed payment by the government or its power companies.
The National Electric Power
Regulatory Authority (Nepra) had been rejecting the government request for
inclusion of these costs and system losses into the power tariff. Therefore,
the government decided to impose surcharges under IMF compulsion.
The latest notification said
the “ex-Wapda Disco shall deposit the amount of this surcharge in a Fund called
the ‘Universal Obligation Fund’ to be kept in Escrow Account maintained at
Central Power Purchasing Agency (CPPA) for exclusive use for discharging the
liabilities of power producers”.
“The surcharge paid under this
notification shall be considered as a cost incurred by a distribution company
to be included in the tariff of that company as determined by National Electric
Power Regulatory Authority and notified by Federal Government in the Official
Gazette”, the notification went on.
Under a written agreement with
the IMF early this month, finance minister had committed “to continue to use
the downward trend to make further adjustments in the surcharge to close any
gap (about 5 per cent) to stay within the FY2014-15 budgeted electricity
subsidy of 0.7 per cent of GDP”.
As promised, the government
took benefit of fuel price reduction of Rs2.97 per unit approved by the Nepra
on December 19, for one month to be passed to consumers in billing month of
January 2015.
Interestingly, the Nepra-approved
reduction in fuel cost would automatically come to an end after one month but
the equalization surcharge would remain part of the base tariff for all times
to come unless power system losses were brought down to less than 10 per cent
from about 19 per cent at present.
When contacted, a power
ministry spokesperson declined to respond to specific questions but tried to
cover it up with a vague written version. The spokesperson sadi the “NEPRA
authorities have determined and notified Fuel Adjustment Charges of
Rs.2.9672/unit out of which Rs2.3672/unit will be passed on to all
the consumers. An amount of Re. 0.60/unit was required to pay for the power
sector finances and notified as surcharge separately. The net effect to end-consumer
is no increase in the rates and net reduction of Rs2.3672/unit."
On November 3 when it was
holding talks with the IMF, the government had imposed another equalisation
surcharge at an average rate of Rs1.5 per unit on consumers of all electricity
distribution companies with retrospective effect from October 1 that would
remain in force until December 31, 2015 to enable revival of $6.78 billion
bailout package suspended in August.
Withdrawal of power and gas subsidies
is one of the key themes of the IMF package.
Exactly a month ago on October
3, the government had imposed a 30 paisa per unit surcharge on electricity consumers.
Under the Nepra law, the
government should have reduced consumer tariff by Rs1.5 per unit in April this
year but it has been delaying passing on the benefit to consumers.
Nepra had completed the tariff
determination process for nine Discos in February and March this year based on
revenue requirements and efficiency standards for the 2013-14 financial year by
reducing prevailing tariff by Rs1.5 per unit.
A ministry official said the
government and its Discos had been fighting a legal battle for almost eight
months to prevail upon Nepra to provide relief to distribution companies, but
had to exercise its “sovereign powers to impose surcharges” on refusal by the
regulator to entertain requests for lenient efficiency standards. (Ends)
