Coronavirus-hit consumers: Power tariff freezing to cost kitty Rs381bn

Power Division has reportedly prepared power tariff freezing for three months aimed at minimising financial burden on the Coronavirus-hit consumers, estimated financial impact of which will be Rs 381 billion, well informed sources told Business Recorder.
Sharing the details of the much-talked about plan, the sources said, it will have an impact of Rs 61 billion built up because of fuel price adjustments till June 2020. An additional built up of Rs 12 billion can be added if increase in tariff is deferred till September 2020.
The sources said, Rs 77 billion will accrue due to non-realization of quarterly adjustments. Further due to the pendency of non-passing the due costs to the consumers, the energy sector circular debt will increase.
To further reduce the impact on consumers, Power Division has also proposed that for a period of six months, taxes and duties on a unit of electricity be waived off which would decrease the cost per unit by Rs 4, lowering the burden on the consumers. The impact on the revenue side of Federal Board of Revenue (FBR) is estimated at Rs 202 billion.
To provide impetus to the industry the average base rate is proposed to be reduced by Rs 2 per unit and by Rs 4 per unit against average incremental consumption. This will have a financial implication of Rs 13 billion till June 2020.
Further for the domestic consumers consuming up to 300 units (phase-1), the electricity bill for March 2020 will be received in three installments, this will have an impact of Rs 18 billion as shortfall in cash recovery. In case, this scheme is extended for the same set of consumers for three months (April, May and June 2020 in three installments), the impact will be Rs 52 billion.
Power Division has also proposed that since Karachi Electric (KE) is an independent utility other than the Discos, for easing out liquidity crunch of the company and to ensure that KE continues to provide electricity to consumers of Karachi, Rs 10 billion be released to KE as part of economic stimulus. This amount will be reconciled with the outstanding liabilities of KE in the subsequent months. KE will implement the same package for 300 unit consumers.
According to sources, total impact of proposals of Power Division has been calculated at Rs 179 billion till June, 2020, in addition to the impact of non-collection of taxes which will be an additional Rs 202 billion.