The government on Tuesday announced a three-phased increase in uniform base power tariff, starting with Rs3.50 per unit with effect from July 26 to generate funds to the tune of at least Rs900 billion during the current fiscal year and secure a bailout from the International Monetary Fund (IMF).
Speaking at a news conference with Minister of State for Petroleum Musadik Malik, Minister for Power Khurram Dastgir Khan said ‘tariff rebasing’ was approved by the federal cabinet under which the second phase of Rs3.50 per unit will become effective next month and with a one-month gap in September, the remaining 91 paisa per unit increase would come into force in October.
He said the tariff rebasing involving Rs7.91 per unit should have come into force in February as the previous rebasing was implemented in February 2021 but the previous government delayed it for political reasons. With this increase of Rs7.91 per unit, the base national average electricity tariff would go up from Rs16.91 per unit to Rs24.82 with financial impact of Rs893bn in FY2022-23, besides over Rs150bn in additional sales tax.
Dastgir said the power tariff would start decreasing in November-December once the rebasing process was complete and the results of the steps being taken by the current government start yielding results.
Even with this tariff adjustment, the government would provide relief to about 45pc of the population or 13 million domestic connections (out of 27 million domestic consumers) with monthly consumption of up to 200 units per month.
The minister said the federal cabinet also decided to ensure uninterrupted power supply to dedicated industrial feeders round the clock and minimise disruptions on mix (industrial and domestic) feeders so that jobs and economic activities remain unaffected.
Likewise, the cabinet also decided to ensure electricity and gas to five export-oriented sectors on priority and keep their tariffs close to the regional export competitors.
The minister said the coming three months would be difficult for the consumers but the power prices would start decreasing from November after reflection of fuel surcharge in the tariff.
He added the tariff increase was already being recovered from consumers in the shape of monthly fuel cost adjustments and quarterly tariff adjustments which have now been taken into account in the tariff rebasing and hence the FCAs and QTAs would be on the lower side.
In response to a question, Dastgir said a new law was being finalised to facilitate commercial transactions on a government-to-government basis in a transparent manner as some friendly countries were interested in investing in Pakistan but had been hampered by existing privatisation laws.
The law that would also come before the parliament for debate would bring transparency in commercial transactions between governments because there had been delays regarding privatisation.
He said the power generation has significantly improved over the previous month after increase in hydropower generation from Tarbela to 4500mw from 1100mw last month and resumption of production from 1100mw K-2 from nuclear power plant that was on outage last month for refueling.
The minister said the efforts of the current government had started bearing fruits as the circular debt it had inherited had been brought down by Rs214bn to Rs2.253 trillion as of June 30 from Rs2.467 trillion. He said the amount of unrecovered bills that stood at Rs300bn when the PML-N had left in 2018 had surged to Rs1 trillion over the past four years.
The minister accused the PTI government of benefiting their “blue-eyed investors” by intentionally delaying key power projects, including 1320mw Shanghai Thar Coal, 1200mw Trimmu RLNG, 1,320mw Jamshoro and 720mw Karot hydropower. Responding to a question, he said the entire tunnel of the Neelum Jhelum Hydropower project was being de-watered to confirm the real cause of the closure.
Minister of State for Petroleum Musadik Malik said the power rates would start declining from October-November due to the “effective policies” of the government. “There will be a visible gradual reduction in the electricity price, hopefully in the coming three to four months,” he added.