ISLAMABAD

The PML-N government is most likely to increase power tariff after the ending of summer season, as it could not afford the expected public as well political reaction when electricity loadshedding has reached to its peak level in the scorching heat.

Sources in Finance Ministry disclosed to The Nation that government has planned to enhance the power tariff in the months to come in order to reduce the electricity subsidies. However, the government is currently avoiding implementing the plan due to expected public as well political reaction in the wake of the severe energy crisis.

“How can the government take a difficult decision when not only people are on the streets seeking electricity but main political parties are also protesting against several reasons”, a sources remarked. He was of the view that government might take this difficult decision by the end of September or October this year, as it did in previous year. However, he could not give the exact percentage of the increase to be made.

He further informed that government had already reduced the power subsidies to Rs 185 billion for the ongoing financial year 2014-15 from Rs 292 billion disbursed during previous fiscal year 2013-14. Therefore, the government would cover the Rs 108 billion through increasing power tariff, he added.

Meanwhile, Pakistan had also informed the International Monetary Fund (IMF) for increasing power tariff during ongoing financial year. “We have prepared the third round identified in the three-year plan for phasing out the Tariff Differential Subsidy (TDS) to continue to bring tariffs to cost recovery level. In this round, Nepra will finalise the determination and notification of tariff for 2013/2014 by end May 2014. Lower oil prices and better company performance led to a lower tariff determination relative to the previous fiscal year. For this reason, the notification will produce only a [4] percent increase in the weighted average notified tariff, while continuing to protect the most vulnerable consumers. The notified tariff will reduce the electricity subsidy to 0.5 percent of GDP for FY 2014/15”, Pakistan said in Memorandum of Economic and Financial Policies written to the IMF.

The notified tariff would reduce the electricity subsidy to 0.5 percent of GDP, which amounts to Rs 144 billion, for fiscal year 2014-15. The increase in electricity price is part of a three-year plan agreed with the IMF with respect to phasing out tariff differential subsidy (TDS) to bring tariffs to cost recovery level. It is worth mentioning here that government in October 2013 has made the unprecedented raise in power tariff ranging from 40-172 percent for domestic and agriculture consumers. The tariff had been raised by Rs11.68 per unit for consumers using electricity from 1 to 300 units per month. And for consumers who utilise electricity from 301 to 700 units a month, the tariff has been increased by Rs10.67 per unit. So much so, consumers using more than 700 units a month would have to pay more Rs12.93 per unit. However, the power tariff would be maintained at the existing level for those consumers who consume only 200 units of electricity a month.