MoF approves 46 percent increase in Pepco consumers tariff

The Ministry of Finance has approved 46 percent increase in power tariff for the consumers of Pakistan Electric Power Company, official sources told Business Recorder on Saturday. The sources said that the increase allowed by National Electric Power Regulatory Authority (Nepra) has not been approved by the government in its entirety; the government has approved only one-third of what was recommended.
This raise will be in addition to 16 percent General Sales Tax totalling 46 percent. The sources said that Nepra had allowed Discos to increase their tariffs by 65 percent, with the exception of lifeline consumers.
In June Pepco had sought a rise of 21 percent in consumer end tariff, along with advance payment of subsidies budgeted for 2008-09 and automatic fuel adjustment on a monthly basis. The sources said the Ministry of Water and Power has finalised tariff notifications, which will be sent for printing after being vetted by the Ministry of Law and Justice.
All the Discos have been asked to submit their calculations for adjustment in average sales rate due to variation in Power Purchase Price billed by Central Power Purchase Authority according to the prescribed transfer price mechanism by 15th of every month as laid down in the prescribed mechanism.
The regulator will determine the revised tariff within five working days of receipt of information from the concerned Disco. The variation in average sales rate will be identified between the various consumer classes so that cross-subsidisation is minimised, as far as possible. This adjustment will not be applicable to lifeline consumers.
The new tariff will not only force the people to avoid unnecessary use of electricity but also save up to 1000 MW power, which means the country can save foreign exchange which is being wasted on import of furnace oil, said another official on condition of anonymity.
In June, the Finance Ministry had briefed the Cabinet that power tariff would touch Rs 10 per unit after the upward revision, however, Secretary Water and Power was of the view that lower income levels would be protected. "It would be a hefty increase targeted to remove Pepco''s growing financial difficulties," Naveed added.
Pepco, in its letter to the federal government had stated that the power sector was suffering from a very serious financial crunch and that''s why they were unable to amounts over due to Independent Power Producers (IPPs). The Finance Ministry has confirmed that Rs 30 billion were released to Pepco for payment to Independent Power Producers (IPPs), Wapda hydel and Pakistan State Oil.