Motion filed with Nepra: Govt seeks additional surcharge of Rs3.39/unit for 4 months

ISLAMABAD: The Federal Government has filed a Motion with National Electric Power Regulatory Authority (Nepra) to impose additional surcharge of Rs 3.39 per unit across the country for four months, i.e., March-June, 2023, which will be reduced to Re .1 per unit from July 1, 2023, sources in Power Division told Business Recorder.

The federal government envisaged arrangements whereby the GoP guaranteed finance facilities have been executed through Power Holding Limited (PHL) for the funding of the power sector payables. Out of the total outstanding finance facilities of Rs. 800.253 billion as of June 30, 2022, servicing of loans amounting to Rs.246.384 billion is being managed by imposing Financing Cost (FC) surcharge levied @ Rs. 0.43/ kWh under section 31 of the Act notified on March 22.2018 as modified from time to time.

According to Power Division, the FC surcharge @ Rs 0.43/ kWh is not sufficient to cover mark-up charges of total PHL loans as mark-up of remaining loans is being paid from revenue collected through electricity sales but it constrains the essential fuel and debt payments to the suppliers.

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Power Division maintains that concerning the issue Economic Coordination Committee (ECC) of the Cabinet on February 10, 2023 duly ratified by the Cabinet on February 14, 2023. approved the additional surcharge of Rs. 3.39/ unit to be recovered for period from March to June 2023 to cover the mark-up charges of PHL loans not covered through already applicable FC surcharge 0.43/kwh for FY 2022-23, total surcharge becomes Rs. 3.82/kWh for the said period and for FY 2023-24.

However, additional surcharge of Rs. 3.39/unit be reduced to Rs. l/unit to cover the additional mark-up charges of PHL loans not covered through already applicable FC surcharge @ 0.43/kwh the total surcharge becomes Rs. 1.43 unit for FY 2023-24. It was also decided that the plan be submitted to the Authority for incorporation of both surcharges, i.e., Rs. 3.82/kWh and Rs. 1.43/kWh for four months of FY-23 and FY-24, respectively, in the latest Schedule of Tariffs of Discos.

Power Division argues that the surcharge so collected is within ten percent of the aggregate revenue requirement of all electric power suppliers, engaged in supply of electric power to end consumers, as determined by the Authority.

Once considered and approved, it will lead to determination of revised uniform tariff in terms of section 31 of the Act for notification by the Federal Government to the extent of modification of existing determined notified rate (inclusive of subsidy/ tariff rationalization surcharge).

Further, in accordance with clause 5.6.3 of the Policy, the government may maintain a uniform consumer-end tariff for K-Electric and Discos even after privatisation through incorporation of direct/ indirect subsidies. Accordingly, KE applicable uniform variable charge is required to be modified to recover revenue requirements of KE determined by NEPRA (inclusive of quarterly adjustments) keeping in view the proposed targeted subsidy and cross subsidies which will also be consistent with the surcharge approved for Discos.

Once the Government proposal is approved by the Regulator, the uniform Scheduled of Tariff (SoT) of Discos would be revised by incorporating surcharges, to be notified in official gazette by way of modification/ amendments in existing SROs. Separate revised SoT for K-Electric after incorporating surcharges would be notified in the official gazette.

In another request, Power Division has also sought Nepra’s stamp on staggering of fuel charges adjustment against flood affected consumers applicable for August and September 2022 to be recovered in eight months starting from March 2023 to October 2023.

Copyright Business Recorder, 2023