Notification issued: three surcharges made part of Discos tariffs for 2015-16

National Electric Power Regulatory Authority (Nepra) has formally issued notifications making three surcharges part of power Distribution Companies (Discos) tariffs for 2015-16. The government intends to recover Rs 100-110 billion from consumers through surcharges of Rs 1.55 per unit by formally notifying Discos' tariffs, pending since long.
According to notifications issued by the regulator, the government has levied tariff rationalization surcharge with immediate effect at the rate mentioned against each consumer, during each of the billing month for maintaining uniform rates of electricity across the country. The companies will deposit the amount of tariff rationalization surcharge in a fund called the "tariff rationalization fund" to be kept in the Escrow Account maintained at Central Power Purchasing Agency Guaranteed (CPPA-G) Limited and utilized exclusively for discharging of determined cost of power producers. The surcharge will be considered as a cost incurred by the Disco and included in the tariff determined by Nepra.
The notifications further state that government has notified "financing cost surcharge" with immediate effect. The companies will deposit the amount of surcharge called the "financing cost fund" to be kept in the Escrow Account for exclusive use of discharging the financing cost of various loans obtained to discharge liabilities of power producers against sovereign guarantees of the Government of Pakistan. The financing cost of surcharge will be considered as a cost incurred by the Disco and included in the tariff determined by Nepra.
Likewise, Neelum Jhelum surcharge has been levied till June 2018, which will be used to develop 969 MW, Hydropower Project. On August 17, 2007 surcharge of 10 paisa/KWh was approved on all electricity consumers except lifeline consumers with the objective of raising funds for the 696 MW Neelum-Jhelum Hydro-power Project. The surcharge was imposed in 2008 for applicability till December 2015. However, later on surcharge was extended till December 31, 2017.
The sources said 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 fulfill 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 financing cost surcharge of Rs 0.43/KWh is meant for recovering the debt servicing applicable to all consumer categories on per unit consumption of Discos except lifeline domestic consumers of the category.
The third surcharge, namely the Tariff Rationalisation Surcharge, levied at an average rate of Rs 1.02 per unit is meant to reduce overall power subsidy on the budget and to keep the tariff uniform across the country through cross-subsidy. This would vary from one distribution company to another and yield about Rs 70 billion per annum.