Reduction in industrial power tariff on the cards

The government is likely to reduce industrial tariff by Rs 1.68 per unit, in addition to Rs 2 per unit on use of electricity over and above its last year's consumption pattern, well informed sources told Business Recorder. This proposal was discussed with Prime Minister Imran Khan during the last few days following a meeting on January 20, 2020. The overall benefit to industry will be to tune of Rs 3.68 per unit.

Power Division has also given a presentation to the Prime Minister on industrial consumers i.e. B1, B2, B3 and B4 category consumers. The industry's peak hours are four, while 20 hours are off-peak. Power Division has proposed a reduction of Rs 1.68 per unit for industrial consumers during peak hours. With this reduction average rate will come down from Rs 16 to Rs 14 per unit. Power Division also wants to give another benefit to the industry: for instance, one industry whose average consumption was 4000 units last year, if that industry uses more power, the government will further benefit it to the tune of Rs 2 per unit.

The sources said Power Division maintains that with an increase in prices demand had dropped and keeping in view paying capacity of consumers, it had made efforts to reduce loss and improve recovery. With the concerted efforts of present team the government collected additional revenue of Rs 289 billion from October 2018 to December, 2019. However, some people argue that this was due to increase in tariff not performance. The sources said the government would determine a mechanism aimed at staggering the passing on of Quarterly Tariff Adjustments (QTA) so that revenue requirement period of the earlier QTA was over, adding that with the mechanism the increase would almost remain the same.

"We have completed working of 18 months with the mechanism that second quarter should be implemented after the first quarter is over. This would entail a little financial hit but Power Division would get the Finance Division to pay pending subsidies and budget it for next fiscal year," said a senior official on condition of anonymity.

The government will issue directives to Nepra to determine monthly Fuel Price Adjustment (FPA) but the government will not pass it on to the consumers. With three or four years' concerted efforts, the people will get sustained supply of electricity the whole year. FCA will be done once in 18 months.