The government has reportedly made three surcharges a regular part of electricity tariff, accumulative financial impact of which has been calculated at Rs 2.07 per unit, well informed sources in Finance Ministry told Business Recorder. Giving justification of the decision, the sources said different courts have issued stay orders against the collection of surcharges due to which power Distribution Companies (Discos) face a financial crunch.
National Electric Power Regulatory Authority (Nepra) also does not include late payment surcharge (LPS) on loans being taken by Discos and with the new decision LPS has also been made part of electricity tariff. According to sources, Ministry of Water and Power informed the Economic Co-ordination Committee (ECC) of the Cabinet at a recent meeting that on August 17, 2007 surcharge of 10 paisa/KWh was approved on all electricity consumers except lifeline consumers for raising funds for the 696 MW Neelum-Jhelum Hydropower Project. The ECC decision was also endorsed by the Cabinet on December 12, 2007. Subsequently, Neelum-Jhelum surcharge was imposed in 2008 for applicability till December 2015.
In addition, a significant shortfall in recovering full cost continues to emerge due to less than full pass-through of the cost of electricity. In order to fulfil financial needs of Discos, loans from banks have been arranged for payment to power producers to maintain power generation and stability of the power sector. The mark-up cost on such loans needs to be transferred and recovered from the end consumers. The Ministry has pleaded to: (a) protect the lifeline consumers from any price escalation, rationalise tariffs and maintain uniform tariff rates across the country and regions; (b) raise funds for the construction and development of Neelum Jhelum Hydropower Project; and (c) to meet the repayment obligations of mark-up cost on such loans obtained against the sovereign guarantees of the Government of Pakistan for the purposes of reducing the above mentioned shortfall and payment of verified costs of power sector, it is required that the Federal Government notify the following surcharges under section 31(5) of the Regulation, Transmission and Distribution of Electric Power Act, 1997 (XL of 1997).
The sources clarified that tariff rationalisation surcharge on national average basis for electricity consumers of Ex-WAPDA Distribution Companies is estimated at Rs 1.54/kwh. The collection of the tariff rationalisation surcharge will be deposited by Discos in a fund called the "Tariff Rationalisation Fund" to be kept in the escrow account of the Central Power Purchasing Agency (CPPA) for exclusive use for discharging the liabilities of the power producers.
The ECC has also extended Neelum-Jhelum surcharge of 10 paisa per KWh on all electricity consumers of Ex-WAPDA Distribution Companies except lifeline domestic consumers till December-2016. The collection of Neelum-Jhelum Surcharge will be deposited by the Discos in a fund called the "Neelum-Jhelum Hydro Project Development Fund" to be kept in the escrow account of the Neelum-Jhelum Company for exclusive use for the Neelum-Jhelum Hydro Power project.
According to sources, the ECC also approved financing cost surcharge @ Rs 0.43/KWh on account of recovering the debt servicing applicable to all consumer categories on per unit consumption of Discos except lifeline domestic consumers of the category 'residential A-1'in respect of, namely, "Financing cost Surcharge". The collection of the financing cost surcharge will be deposited by Discos in a fund called the "Financing cost Fund" to be kept in the escrow account of the CPPA for exclusive use for discharging the liabilities of the power producers.
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