ISLAMABAD  -  While criticising the govern­ment’s decision to make anoth­er raise in electricity tariff, the Federation of Pakistan Cham­bers of Commerce & Industry’s Businessmen Panel (BMP) has urged the NEPRA to reverse the decision of hike in power charges, as it has increased tariff of power distribution companies by Rs4.56 per unit as part of the December fuel adjustment to recover Rs76 billion from trade and industry.

FPCCI former president and Businessmen Panel (BMP) Chairman Mian Anjum Nisar observed that this change in tariff will cause an additional burden of Rs40 billion on con­sumers. He added that it is un­fortunate that during last two months, electricity prices have gone up by Rs8.69 due to fuel price adjustment. In November alone, the electricity tariff was raised by Rs4.13. In just two months, the power tariff raise has put an additional burden of Rs76 billion on consumers. 

Mian Anjum Nisar said that the requests from these firms have come amid a prevailing inflation rate of 30 percent, sug­gesting that official estimates of declining inflationary trends might be less forthcoming be­cause electricity and gas rates have a major contribution to the price baskets. Besides, the State Bank of Pakistan (SBP) has kept its policy rate unchanged at a record 22 percent, citing fre­quent energy price hikes that keep inflation at elevated levels.

In their separate tariff peti­tions, the Discos have sought to rise about Rs81.5 billion from their consumers in three coming months under the quarterly tariff adjustment for the October-December 2023 period. This is also on top of about a Rs6.5 per unit monthly fuel cost increase for the billing month of February that currently awaits a deci­sion by the National Electric Power Regulatory Authority (NEPRA). The regulator has accepted the respective tariff petitions and has called pub­lic hearings on February 14 to see if the proposed increase in tariff is justified in line with the quarterly tariff adjustment mechanism. The quarterly ad­justments for Discos now also apply to K-Electric consumers as well under recent govern­ment and regulator decisions.

The Discos have sought the increase to finance the addi­tional financial impact of ca­pacity charges arising out of currency devaluation and the interest rate hike besides the market operator fee, the impact of transmission and distribu­tion losses on fuel cost adjust­ments, the cost of incremen­tal consumption and variable operation and maintenance charges for the second quarter of the current fiscal year.

At present, the consumers are paying about Rs3.28 per unit QTA for the fourth quar­ter of the last fiscal year that would remain applicable for six months — from October 2023 to March 2024 — to mop up more than Rs200 billion from power consumers across the country, including those of K-Electric. Another QTA for July-September 2023 is also being charged to consumers at the rate of Rs1.15 per unit for the billing period of Janu­ary to March 2024 to raise another Rs22.3 billlion. Under the petitions, the Disco from Lahore has demanded the highest claim of Rs15.1 billion, followed by Rs14.9 billion by Multan Electric, Rs11.6 billion by Peshawar Electric and Rs11 billion by Quetta Electric. 

These are followed by a Rs9.45 billion claim filed by Faisalabad Electric, Rs6.92 billion by Islamabad Electric, Rs3.5 billion by Hyderabad Electric, Rs3.5 billion by Tribal Electric, Rs2.9 billion by Suk­kur Electric and Rs2.7 billion by Gujranwala Electric. The biggest chunk of additional cumulative burden on account of capacity charges has been claimed by Discos at Rs75 bil­lion for the quarter, followed by Rs10.8 billion on account of the uncovered impact of trans­mission and distribution loss­es and Rs6.6 billion on account of the use of service charges and market operator fee.

On the other hand, Discos have offered Rs8.7 billion worth of negative variable operation and maintenance charges and Rs2.34 billion worth of im­pact of incremental sales, thus working out a cumulative net additional demand of Rs81.5 billion. On approval, the adjust­ment would be recovered on a uniform basis from all consum­ers except for lifeline users. The BMP chairman said the govern­ment’s decision to increase the electricity tariff is anti-industry, and the BMP strongly con­demns the government’s move and calls on it to rescind it. He urged the power ministry to identify system constraints and communicate targets to all con­cerned departments in order to launch a wartime effort to up­grade the transmission system. It is to be noted that the author­ity conducted the hearing in the matter on November 29, 2023, wherein the data submitted by the CPPA-G came under scru­tiny. According to reports, the NEPRA reviewed the request by CPPA-G seeking monthly FCA and due diligence was done accordingly. From perusal of the information so provided by CPPA-G, the actual pool fuel cost for the month of October 2023, as claimed by CPPA-G, is Rs11.4277/kWh, against the reference fuel cost component of Rs7.8938/kWh. The actual fuel charges, as claimed by CP­PA-G, for the month of October 2023 increased by Rs3.5339/kWh as compared to the refer­ence fuel charges.