ISLAMABAD: The federal government on Friday increased base tariff of electricity by Rs 4.96 per unit from July 1, 2023, across the country as per understanding with the International Monetary Fund (IMF) taking base tariff up to Rs 29.78 per unit, premised on revenue requirement of Rs 3.281 trillion, based on different yearly economic assumptions.
The base tariff will be applicable to all power Distribution Companies (Discos) and K-Electric.
In 2022, PTI government raised base tariff by Rs 7.91 per unit in three phases due to which base tariff jumped to Rs 24.82 per unit from Rs 16.91 per unit.
Hike in power tariff widely expected
In the 12th June press release after Board approval of the US 3 billion stand-by arrangement the IMF Executive Managing Director Kristalina Georgieva stated that Pakistani authorities urgently need to strengthen energy sector viability by aligning tariffs with costs, reforming the sectors cost base, and better-targeting power subsidies.
The assumptions for increase in base tariff were as follows: (i) RLNG price, Rs 3,554 per ton; (ii) imported coal at Rs 42,584 per unit from Rs 1,951 per unit; (iii) local coal Rs 13,070 per unit from Rs 1,220 per ton; (v) gas Rs 1,103 per MMBTU; (vi) furnace oil Rs 109,947 per ton; (vii) US dollar to PKR, Rs 286; (viii) Pak-CPI, 17.07 percent; (ix) US-CPI, 2.45 percent; (x) KIBOR, 19.4 percent; and (xi) LIBOR, 4.5 percent.
The sources said that purchase of power Distribution Companies (Discos) are estimated at 124,860 GWh whereas sales of Discos would be 110,165 GWh. Energy Purchase Price (EPP) is projected at Rs 840.462 billion the cost of which is Rs 7.63 per unit whereas Capacity Purchase Price would be Rs 2,025,697 million (over Rs 2 trillion) at Rs 18.39 per unit, which implies that total Power Purchase Price (PPP) would be Rs 2,866,159 million (Rs 2.866 trillion) the cost of which would be Rs 26.02 per unit.
The estimated financial impact of Distribution Margin and Prior Year Adjustments is estimated to be Rs 415,003 million (Rs 415 billion) price of which is Rs 3.77 per unit.
The sources said total revenue requirement for the CFY 2023-24 would be 3,281,162 million (Rs 3.281 trillion), cost of which is Rs 29.78 per unit.
This implies the government had to increase base tariff by Rs 4.96 per unit to raise current base tariff of Rs 24.82 per unit to Rs 29.78 per unit from July 1, 2023.
According to official statement issued by the Regulator, NEPRA determines different consumer-end Tariff for each distribution company (XWDISCO), owing to their different revenue requirements and allowed different level of T&D losses. The determined tariffs are intimated to the Federal Government to file uniform tariff application.
The uniform tariff so determined by NEPRA after incorporating the amount of subsidy/ surcharges as intimated by the GoP, is notified by the GOP to be charged from the consumers.
MEPCO, GEPCO, HESCO, SEPCO, QESCO, PESCO & TESCO filed Adjustment/indexation request under Multi-year tariff regime for FY 2023-24.
IESCO, LESCO & FESCO filed Multi-Year Tariff petitions for FY 2023-24 to FY 2027-28, and also requested for Interim Tariff for FY 2023-24.
The Authority, has accordingly, determined the consumer-end tariff for FY 2023-24.
The revised National Average tariff for the FY 2023-24 has been determined as Rs.29.78/kWh, which is Rs.4.96/kWh higher than the previously determined national average tariff of Rs. 24.82/kWh.
NEPRA further explained that the increase of Rs.4.96/kWh is mainly due to overall low sales growth, PKR devaluation, high inflation, exorbitant interest rates and addition of new capacities etc.
Total Revenue requirement of Discos is projected as Rs. 3,281 billion with projected sales of 110,165 GWh for the FY 2023-24.
Any relief of decrease in tariff will be directly transferred to the consumers in future, in case of appreciation of PKR, decrease in inflation and interest rates etc.
Meanwhile, NEPRA has also released annual tariff determinations of six DISCOs’ i.e. HESCO, SEPCO, QESCO, MEPCO, PESCO, and TESCO. The revenue requirements of DISCOS are also part of rebasing of electricity for tariff FY 2023-24. However, no details of rebasing have been shared with the media.
Copyright Business Recorder, 2023
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