Quarterly adjustment thru power tariff hike: Govt seeks recovery of Rs146bn from consumers in 6 months

ISLAMABAD: The government has sought the recovery of Rs146 billion from electricity consumers in the next six months on account of quarterly adjustment through a hike in tariff.

On Wednesday, the National Electric Power Regulatory Authority (NEPRA) held a hearing on quarterly adjustment of April-June 2023 sought by the XWDISCOs.

The Power Division or XWDISCOs has sought recovery of Rs146 billion from the power consumers and requested the authority to allow them to recover in the next six months because this would have Rs2.31 per unit impact in tariff against Rs5.4 per unit in three months.

Rs7.50 hike in power tariff formally approved

The authority asked the Power Division to submit a request for the recovery of Rs146 billion in six months in writing provided that its fiscal impact is not passed on to the consumers. Of Rs146 billion recovery, Rs124 billion are on account of capacity charges, Rs7.5 billion O&M, Rs7.2 billion impact of transmission and distribution losses on monthly FCA, and Rs14.3 billion on use of services charges and financial cost.

The authority said that this cost incurred would be recovered. The reason for quarterly adjustment has been cited exchange rate, KIBOR, LIBOR with reference exchange rate was taken at Rs204, whereas, the actual exchange rate at that point in time was Rs284.

KIBOR reference rate was 10.50 per cent while actual it was 21.98 per cent and likewise, reference rate of LIBOR was 0.409 per cent, whereas, actual it was 5.1939 per cent.

The authority was also surprised over less withdrawal (against the allocated quota) of electricity by DISCOs and appeared dissatisfied over their responses in this regard.

The DISCOs stated that less withdrawal was primarily because of the closure of industry consequently to LCs issue and floods, as well as other seasonal issues.

The TESCO stated that the steel mills have closed their business in the tribal areas and they had to reduce supply hours to domestic consumers due to fiscal constraints because the federal government did not provide fund. The NEPRA was informed that there has been a reduction of three billion units in consumption this year as opposed to last year.

The hearing was informed that last year 28 billion units were consumed by the DISCO and this year it is 25 billion units. The Power Division said that the TESCO was being provided subsidized electricity and all the allocated subsidies for the last fiscal year have been released to them.

Representatives of HESCO said that less withdrawal of electricity in its jurisdiction was due to floods and the closure of industry following problem of LCs. As a result, utilisation of electricity by the industry in their jurisdiction was reduced.

The authority observed that if the demand of electricity was reduced due to less utilisation of power by the industry, then it is very alarming.

The authority was informed that GEPCO and IESCO where the steel melters are more, these two DISCOs demand was also reduced by 14 percent. The DISCOs sought some time explain as to how much electricity consumption was reduced due to less consumption of electricity by the industry and how much because of weather and other factors.

After knowing that more than 350,000 connections are pending, upon which, the authority expressed surprise and stated that if these connections were allowed the impact of the tariff would have been less on the end consumers.

The authority questioned why KE is part of the hearing today as it would be bad for the authority to decide something to take a decision in the absence of the major stakeholders. As after the approval of the federal cabinet, now the DISCOs quarterly adjustment would be automatically applicable to the KE. The authority admitted that KE was not noticed.

Copyright Business Recorder, 2023