NEPRA has given permission to issue notification of increase in electricity prices

ISLAMABAD: To meet another condition of the IMF program, the National Electric Power Regulatory Authority (NEPRA) has asked the federal government to increase the basic electricity tariff for all residential consumers from November 1 to Rs 1.68 per unit and for all others. 1.39 per unit increase notification was issued.

According to the Dawn newspaper, the additional tariff will apply to all power companies across the country, including K-Electric, but all residential consumers using up to 200 units per month will be protected from price increases through subsidies. This decision will bring about Rs 168 billion to the power companies and reduce the subsidy that was to be paid from the budget for the current financial year. With this review, excluding various taxes, surcharges and duties, the average electricity tariff will now increase from Rs 13.97 per unit to Rs 15.36 per unit. The power division said the government was now providing protection to consumers at the rate of only 200 units per month. The statement said that while doing so, the first 50 units (Lifeline users) will be charged Rs 3.95 per unit while another category of Lifeline users who use 51 to 100 units per month will be charged Rs 7.74 per unit. Customers using 101 to 200 units will be charged Rs 10.06 per unit without any change and tax. All residential customers above the 200 unit limit will face an increase of Rs 1.68 per unit. The tariff increase will take effect on November 1 and will apply to all Discos and K Electric.

A NEPRA official said the increase was necessary due to additional capacity payments and exchange rate losses but some additional factors such as the cost of Matiari Lahore Transmission Line and Karachi Nuclear Power Plant 2 would be in the form of quarterly tariff adjustment. NEPRA said that with this approval, the government would impose consumer and tariffs on a few consumer categories compared to NEPRA’s national average rates. Regarding the additional tariffs proposed by the government for different categories of consumers, NEPRA clarified that it did not impose any surcharge but it was the government which had the legal authority to do so. He said that under section 31 (8) of the Electric Power Regulation of Generation, Transmission and Distribution (Amendment) Ordinance 2021, the federal government has the power to levy surcharge and any such surcharge. The cost should be included in the tariff set by NEPRA.

However, NEPRA also acknowledged that the revised tariff was also subject to the discus’s overall revenue requirements. It said the government had at that time increased only Rs 1.95 per unit while an increase of Rs 1.39 per unit was pending. It was clarified that there will be no increase in tariff for Lifeline users and secure users using up to 200 units per month but an increase of Rs 1.68 per unit is applicable for the remaining domestic users. A lower increase of Rs 1.39 per unit has been allowed for other categories of consumers as the government does not want to impose more burden on these consumers, especially industrial consumers. While NEPRA has allowed the tariff hike, its vice-chairman Rafiq A. Sheikh disagreed, saying that the national electricity policy requires timely recovery of the full cost of the service but the cost should be reasonable.

“Capacity payments to faulty power plants, extensions to contracts with 1994 power policies, faulty transmission systems are all wrong costs that cannot be passed on to consumers,” he said. It may be recalled that Energy Minister Hamad Azhar had announced in October that the decision to increase the base electricity tariff by an average of Rs 1.39 per unit was taken during a meeting with the World Bank management.

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