ISLAMABAD: Central Power Purchasing Agency-Guaranteed (CPPA-G) on Monday said that it is working to file another motion within NEPRA for increase of Rs 1.55 per unit in KE’s tariff for second quarter (October -December) 2021-22 under Quarterly Tariff Adjustment (QTA), in addition to Rs 0.57 per unit for first quarter of FY 22 except lifeline consumers, aimed at maintaining uniform tariff across the country.
This was disclosed by a representative of CPPA-G, Naveed at a public hearing held in National Electric Power Regulatory Authority (Nepra) on the Motion of Federal Government to get final nod of regulator for adjustment of Rs 0.5715 per unit in Schedule of Tariffs (SoT). Power Division has proposed to apply the increase on the consumption of June, July and August 2022 to be recovered from consumers in July, August and September, 2022, respectively.
According to CPPA-G representative, Nepras recommended rate for KE for FY 22 is Rs 30.06 per unit, whereas GoP rate is of Rs 25.52 per unit, which implies that a subsidy of Rs 4.55 per unit is being extended to the domestic consumers of KE. He said, with applicability of Rs 0.5715 per unit, the rate of Rs 30.06 per unit will remain the same but the rate of Rs 25.52 per unit will increase to Rs 26.08 per unit. The subsidy will reduce to Rs 3.98 per unit from existing Rs 4.55 per unit. With the applicability of Rs 1.55 per unit, subsidy will further reduce to Rs 2.43 per unit.
Joint Secretary (Power Finance), Power Division, Mehfooz Bhatti, stated that implication of Rs 0.5715 per unit has been delayed due to some internal process and now consultation with Law Ministry is ongoing to avoid any delay in future. He maintained that previously, QTA was charged annually and this is first time it is being implemented for a quarter.
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He said, KE’s domestic consumer tariff is lower by 4.55 per unit vis-à-vis Nepra determined tariff of July 2022 and Government notified tariff, which indicates a huge difference. The government intends to pass on Rs 0.5715 per unit to the consumers of KE so that its tariff should be closer to national average tariff.
The Economic Coordination Committee (ECC) of the Cabinet, in its meeting on July 20, 2022 approved an increase of Rs1.55 per unit in the tariff of KE aimed at bringing its tariff in line with the uniform tariff policy under Quarterly Tariff Adjustment.
Under section 31(7) of the Nepra Act, Nepra in its determination of June 16, 2022 has determined periodic adjustment in tariff for the second quarter of FY 2021-22 for distribution companies. In light of this determination, Nepra has recommended a uniform rate for the second quarterly adjustment of FY2021-22 for the consumers of distribution companies for a three-month period.
In accordance with the National Electricity Policy, 2021, the government may maintain a uniform consumer-end tariff for K-Electric and state-owned distribution companies (even after privatization) through the incorporation of direct/ indirect subsidies. Accordingly, KE’s applicable uniform variable charge is required to be modified to maintain the uniform tariff across the country. This will result in a tariff increase of Rs1.5547/ unit with a recovery period of three months.
In the light of proposals approved by the ECC, Power Division will approach Nepra to issue a revised Schedule of Tariffs determined for the quarter of October to December 2021 or incorporate it in the latest Schedule of Tariffs being determined by Nepra for the quarter January to March 2022, after incorporating tariff rationalization and upon approval of Nepra, notify it in the official gazette by way of modification in SRO Nos. 575(1)/2019 as modified from time to time.
The approved adjustments of Rs 1.55 per unit shall be recovered from consumers in August 2022, September 2022, and October 2022, respectively. According to sources, ECC also recommended that any change in tariff of the Discos shall also automatically be applied to KE. However, Power Division noted that it would require approval of the Federal Government. The ECC also inquired the status of the solar policy. The Minister for Power noted that the Power Division shall brief the ECC on solar policy in its next meeting.
Copyright Business Recorder, 2022
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