12 percent rise in power tariff during 2011-12

The government is likely to raise power tariff by a maximum of 12 per cent during the next fiscal aimed to minimise the differential between the existing tariffs of Discos'' and cost recovery, well-informed sources told Business Recorder. The government recently increased power tariff of Discos by two per cent across the board and two per cent is expected next month.
Finance Ministry, sources said, is working on this formula in consultation with Pakistan Electric Power Company (Pepco) and International Monetary Fund (IMF). Replying to a question sources maintained that there would be no change in existing tariff policy and all the consumer categories would continue to get power supply as per prevalent mechanism.
Answering another question, the sources said, the government was consulting all the stakeholders to amend Nepra Act for direct notification of full cost recovery from the consumers. For the power sector, the subsidy regime will be eliminated from July 1, 2011. The government is to earmark Rs 148 billion for power sector in 2011-12 against Rs 239 billion last year. The tariff differential subsidy on electricity will be eliminated over medium term while other subsidies are anticipated to remain at the existing level.
The sources said federal government would give preference to hydropower projects in the budget 2011-1 2 instead of power sector infrastructure. Pakistan''s power sector losses are worse than even some African countries. The government, however, claims that power sector reforms have deepened and substantive progress has been achieved in the overall reform process.
"The process has taken more time than initially conceived because it is being carried forward with the consensus of the stakeholders," the sources added. Finance Ministry argues that there is a need to expedite the restructuring process and further deepen management, restructuring and addressing structural and regulatory issues.
The Bhasha dam, a major hydroelectric project, will commence from next fiscal year. Work on Neelam Jhelum hydropower project will continue. For the water sector, work on raising of Mangla dam, Kachi canal (phase 1), Rainee canal (phase -1), extension of Right Bank outfall drain from Sehwan to Sea, (RBOD), Dadu and Thatta district will also continue.