Federal government is expected to increase electricity tariff by Rs 4 per unit to be implemented in two phases and would be across-the-board as Prime Minister Nawaz Sharif has given his consent to the proposal floated by the Water and Power Ministry and backed by Finance Minister Ishaq Dar, well-informed sources told Business Recorder.
"We want to collect Rs 200 billion through tariff increase during next financial year to save power sector from total collapse," said an official on condition on anonymity. According to sources, the issue of tariff rationalisation was discussed at a high level meeting presided over by Prime Minister on Friday with back-to-back meetings in the Finance Ministry. The government has earmarked Rs 150 billion for inter-Disco tariff differential for 2013-14 against Rs 120 billion budgeted in 2012-13 but revised upward to Rs 250 billion.
The current average power generation cost stands at Rs 11.99 per unit, whereas consumers pay only Rs 8.89 per unit. The government pays Rs 3.10 per unit tariff differential in subsidies. The government claims that the current average cost of electricity is about Rs 14 per unit and the sale prices Rs 8.89 per unit.
An official of power ministry said that Iesco was the most efficient power distribution company and its tariff was the benchmark across the country. According to current policy, Iesco tariff is implemented for the consumers of all Discos. "If the government takes this tariff as benchmark, consumers across the country will be facing hike by Rs 4.80 per unit," official said, adding that hike in tariff has been determined for the ongoing financial year due to raise in power generation cost and other operational expenses.
Based on the targeted sales of 7,690 GWh the company''s average sale rate worked out to Rs 13.64/kWh, consisting of Rs 11.45/kWh of adjusted PPP, Rs 0.95/kWh of DM Rs 0.14/kWh of quarterly PPP adjustments and Rs 1.10 of prior year adjustment. According to a decision given by Nepra in April this year on a tariff petition filed by the Islamabad Electric Supply Company (Iesco) the domestic consumers consuming 50 units per month will face hike in tariff by Rs 1 per unit, Rs 2.30 per unit raise for 1-100 units per month, Rs 4.80 per unit for 101-300 units, Rs 3 per unit for 301 to 700 units and Rs 1.50 per unit for domestic consumers using over 700 units per month.
Iesco commercial consumers will face hike of Rs 1.50 per unit and agricultural and industrial consumers of Rs 3.30 per unit. Nepra has increased reference price of furnace oil from Rs 65,000 to Rs 75,000 per ton which also became one of the main reasons for increase in power tariff. Water and Power Minister Khawaja Muhammad Asif as well as other officials contacted by this correspondent refused to comment on this issue.
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