Industrial consumers: reduction in tariff notified

The Ministry of Water and Power has notified Rs 3 per unit reduction in industrial consumers' tariff and instructions were passed onto Distribution Companies including KE on Thursday. In December 2015, the Prime Minister had announced Rs 3 per unit reduction in industrial tariff from January 2016. However, the Water and Power Ministry could not implement the announcement because Nepra determined tariff for Fesco only.
According to an official statement, Ministry has issued instructions to all the DISCOS and KE that payments from industrial consumers shall be received under the reduced tariff with effect from January 01, 2016. The Ministry in its summary to the ECC has argued that the European Union (EU) granted Generalised System of Preferences (GSP) plus status to Pakistan permitting Pakistani products a duty-free access to the European market. Subsequently, in addition to other facilities and in order to urge exporters to increase exports for the country, the Prime Minister announced a reduction of Rs 3/ KWh in the electricity tariff for industrial consumers during the 39th Annual Export Awards Distribution Ceremony organised by the Federation of Pakistan Chambers of Commerce and Industry in Karachi, on 28th December 2015.
The Ministry further stated that until now, NEPRA has announced consumer tariff for the FY 2015-16 only for Faisalabad Electric Supply Company (FESCO), which is also not accepted by FESCO owing to non-coverage of adequate revenue quantum. The remaining Distribution Companies have not yet received the new tariff for FY 2015-16. NEPRA's new notified tariff for the FY 2015-16 will be required for implementation of the Prime Minister's directive, comprehensively.
Ministry, in its summary argued that in order to implement the Prime Minister's directive and pass on the relief announced for industrial consumers during the period NEPRA takes to finalise tariffs of all the DSICOs for the current year, Ministry of Water & Power proposes following suggestions: (i) existing base tariff for the Industrial consumers be reduced upto Rs 3/ Kwh for the FY 2015-16 and maintain a uniform tariff and ; (ii) negative Fuel Price Adjustment (FPA) may not be passed to the industrial consumers till the tariff determination of X-WAPDA DISCOs FY 2015-16 is notified. A subsidy due to reduction in the base tariff for the industrial consumers is expected to be almost offset against the monthly Fuel Price Adjustment of the respective period.