MONDAY NOVEMBER 14: Power tarrif hike: Prime Minister gives ministry go-ahead

ISLAMABAD: Prime Minister Yousaf Raza Gilani has allowed the Ministry of Water and Power to increase power tariff of distribution companies (discos) by up to 53 paisa per unit, according to official documents exclusively available with Business Recorder.
"Prime Minister and Finance Minister Dr Abdul Hafeez Shaikh have approved the proposal, but Cabinet's ratification is required, which will be granted on Wednesday," said an official of the Finance Ministry.
The proposal is on the agenda of the Cabinet meeting to be in Lahore.
With the approval of the Cabinet, the tariff for domestic consumers, using 1-100 units per month will increase by 17 paisa per unit, followed by 26 paisa for 101-300 units consumers, 43 paisa for using 301-700 units, 53 paisa for above 700 units, Time of Day (ToD) peak by 49 paisa per unit and 27 paisa for off-peak.
Tariff increase for commercial, industrial and agriculture consumers is within this range, the documents say.
According to the documents, on a summary seeking approval of the Prime Minister to raise the prevailing 4 percent surcharge to 8 percent on all categories of the tariffs in case of ex-Wapda discos, the Prime Minister, while approving the proposal, directed the Ministry of Water and Power to place the matter before the Cabinet for ratification, after having been considered and approved by the Cabinet Committee on Restructuring (CCoR)/Energy Committee headed by Finance Minister Abdul Hafeez. The matter was considered and approved by the Energy Committee.
In December 2010, Nepra determined and forwarded its tariff determination of eight discos for the first quarter (July-September) for 2010-11, which was notified on March 15, 2011.
Since the tariff determination of all eight companies was at variance and in most of the cases the tariff of respective categories of consumers was equal to the already levied uniform tariff, the difference between the consumer tariff and Nepra's tariff became the liability of the government.
According to sources, the government is committed to reducing the subsidy to its minimum. Therefore, with the approval of the Prime Minister on a summary moved by the Ministry of Water and Power, a two percent raise in consumers' end tariff was notified on May 6, 2011, thereby raising the surcharge to 4 percent.
In order to further reduce tariff differential and government subsidy to ensure full cost recovery, tariff was steadily increased with the objective of reaching zero subsidy by the start of fiscal year 2012-13. The 'Business Plan 2011-12' envisaged raising existing tariff as prevailing on June 30, 2011 by 12 percent at 2 percent at appropriate intervals, during this financial year.
So far, in the financial year 2011-12, no tariff increase has been made. Three months have elapsed till now thereby compelling a raise through addition of 4 percent surcharge on the existing levels of surcharge in case of ex-Wapda discos and increase in KESC's tariff by 4 percent.
The Ministry, therefore, proposed to raise the prevailing 4 percent surcharge further by 4 percent to 8 percent on all categories of tariffs in case of ex-discos, except for lifeline consumers, along with a similar tariff increase in fixed charges over the prevailing tariff remaining within the maximum limits of Nepra's determined rates.
The Ministry of Water and Power has reverted the decision to disband Pakistan Electric Power Company (Pepco) after the reported involvement of President Asif Ali Zardari. Analysts argue that this will irk the international financial institutions, including IMF. A Pakistani team is currently engaged in Article IV consultations with the IMF team in Dubai.