Electricity tariff raised

The federal government has announced increase in power tariff of industrial and commercial consumers from August 1, 2013 (today) and domestic consumers from October 1, 2013. However, there will be no increase in power tariff of domestic consumers who use 200 units or less in a month.
The announcement was made by Minister for Water and Power, Khawaja Asif at a press conference here Wednesday. Insiders in the Ministry of Water and Power told Business Recorder that increase in power rates for commercial and industrial consumers will not be less than 70 per cent.
"We have tried to put the burden on those segments of society that are able to bear it. This decision could not be avoided as the government has to face Rs 600-700 billion circular debt next year again. At present, government is charging Rs 8.80 per unit against average power price of Rs 14.70 per unit.
The minister said that a question could be raised that since the nation was still facing load shedding why the tariff is being increased. Generation has touched 16,170 MW in Pakistan's history and the government will try to maintain generation level at 15,000 MW on average. Distribution will be managed in a way that will indicate substantial reduction in load shedding. He said, Ramazan has more or less passed and the government made utmost efforts to avoid load shedding during Sehr, Iftar and Taraveeh timings.
"We have succeeded to a maximum level to keep Sehr, Iftar and Taraveeh load shedding free. However, he acknowledged that in some areas of the country the government failed to avoid load shedding which can be attributed to system issues more than regular outages." He said the government was also working on a plan with the provinces to regulate markets. He maintained that the government would legislate to close markets at the same time across the country in the evening to save 1,200 MW power. He added that the government was expected to complete the distribution of 6 million energy savers by December this year resulting in saving of 700 MW power.
He said there had been no adjustment in power tariff for last 14 months and therefore the government was forced to pay Rs 480 billion to clear circular debt. The government now wanted to raise power tariff to avoid circular debt and phase out subsidy. However, he said the government would protect those consumers who could not afford increase in power rates. He added that the government would not increase power price for the consumers using 200 units per month. "The government will be facing circular debt of Rs 600 to Rs 700 billion next year if power tariff is not increased," Asif said.
He said the government would also continue efforts to reduce load shedding. "Power production reached a historic level of 16,170 MW on Tuesday," he said, adding that the government would try to produce average 15,000 MW power. He said power shortfall stood at 3,200 MW against 5,000 MW when PML-N government came into power.
"Power theft amounts to Rs 120 to Rs 200 billion per annum and the government is going to make power and gas theft as non-bailable act with huge penalties," he said, adding that the government would also set up utility courts to take action against consumers involved in power and gas theft. He added that cases of big power defaulters would be handed over to Federal Investigation Agency (FIA). He said Balochistan wanted more power from Iran and arrangement would be made to import power from Iran to meet requirement of the province. He said the issue of adjuster to settle power dues with the provinces had not been finalised yet. He said the board of directors of power firms had been dissolved and new chiefs would be appointed soon. He said talks with India were under way to import electricity with India. However, power import is not possible from India unless she installs system," he added.
He said main thrust of energy policy was to rationalise the energy mix by focusing on more power generation through coal instead of fuel. He added that Pakistan was on top in power generation through fuel sources. He maintained that the government would try to end load shedding in three to five years. Replying to a question regarding KESC, the minister said the federal government has a number of claims against the utility company whereas the latter has counter claims.
For instance, KESC owes Rs 40 billion of SSGC but the KESC is demanding the amount of Karachi Water Supply Board (KWSB) which is provincial entity. Federal government is also approaching the court for vacation of stay order of SHC on alleged violation of CCI decision regarding withdrawal of 300 MW electricity from KESC system.
On Nandipur combined cycle project, Asif said the cost of the project has crossed Rs 58 billion. Some of the cost is definitive like interest of Rs 11 billion and some cost is anticipatory. He said the government did not spend a single penny on the project. The revised PC-1 was finalised by the previous government in January 2013. He said Rs 32 billion have been spent on the project so far.
Khawaja Asif said all the documents are being sent to the TI Pakistan for scrutiny. According to a press release, Muhammad Shahbaz Sharif, CM Punjab, Syed Qaim Ali Shah, CM Sindh, Pervez Khattak, CM KP and Dr Abdul Malik Baloch, CM Balochistan attended the meeting. The prime minister congratulated the members of the CCI for consensus approval of the power policy. While talking during the meeting, the prime minister said it was the policy of his government to arrive at consensus decisions, a fact which, he said, was eminent from the approval of the current power policy. "We respect the mandate of all the provincial governments and would support them in their endeavours initiated for the welfare of the people," added the prime minister.
He said the country was passing through a critical phase and demanded greater unity and discipline among all of us. Talking about the no-confidence motion in AJK, the prime minister said, "We have to set principles of governance in our country. The no-confidence motion in AJK was not supported by PML-N due to our principled stand for stabilising the provincial governments," conveyed the prime minister.
The premier stressed on the need of learning from each other's experiences and expertise. Each province should share its success with other provinces so that it can be replicated. "We can overcome our shortcomings and improve our governance through sharing and working closely with each other," added the premier.
Later, the report of the technical committee on power policy was presented before CCI which unanimously approved the National Power Policy with few additions. The committee report had incorporated Sindh government's demand for developing coal and wind corridors with the facilitation of federal government. The technical committee also proposed integrated utility courts for dealing with electricity and gas thefts and rationalising the penalties for such crimes in light of principles of jurisprudence. Both the proposals were approved by CCI and made part of National Power Policy.
The meeting also discussed the transmission and distribution difficulties faced by Khyber Pakhtunkhwa and Balochistan. The prime minister assured that the federal government is ready to provide adequate funding and assistance for effective distribution of electricity to these provinces. The meeting also discussed energy efficiency and conservation measures. The prime minister said that conservation of energy needs homogeneous implementation by all provinces so that steps taken to conserve energy have a balanced effect on the country.
While mentioning the vast opportunities of hydel power production in his province, CM KP said huge investment opportunities are available in the province and his government has already started two run-of-the-river projects in District Kohistan. He asked for the Federal Government's assistance to further explore such opportunities. The prime minister assured CM KP of full support of the federal government and asked him to identify more such projects for optimum utilisation of the hydel resources.
Chief Minister Sindh said that wind resource in the coastal region of Sindh needs to be explored to provide cheap electricity and will suffice the energy needs of the province. CM Balochistan stressed upon the need for provision of electricity to Balochistan from Uch-2 Project to cater for the power needs of the province. Among others Pir Syed Sadruddin Shah Rashidi, Minister for Overseas Pakistani and HRD, Lieutenant General Abdul Qadir Baloch (Retd), Minister for Safron and Sardar Muhammad Yousuf, Minister for Religious Affairs attended the meeting.