PM grants anticipatory approval for increase of base power tariff

ISLAMABAD – Prime Minister Shehbaz Sharif has granted anticipatory approval for increase of base power tariff by Rs7.91/unit enabling the power distribution companies to collect additional Rs893.83 billion from the consumers during ongoing fiscal.

Following the anticipatory approval by the PM, the government has intimated NEPRA regarding the decision and now the regulator will conduct public hearing on the proposed subsidy to be provided to the consumers for the determination of uniform base tariff across Pakistan, official source told The Nation. After the hearing NEPRA will again send its decision to the power division for final notification.

NEPRA on June 2, 2022 had approved an hike of almost 47pc (Rs7.91/unit) in base power tariff. After the decision the national average base tariff will go up to Rs24.82/unit from the existing determined national average tariff of Rs16.91/unit.

However, after the application of 17pc GST to the new base tariff per unit cost will reach around Rs29.034/unit. The increase of Rs7.91/unit in the base tariff will enable the power distribution companies to collect an additional RsRs 893.83 billion in one year. The government will pass on the proposed increase in base tariff to consumers in three phases.

In a summary moved to the Prime Minister for tariff rationalisation for power sector, the power division said that NEPRA vide its determinations dated 2nd June 2022 determined revenue requirements of each of the XWDISCOs.

The same was intimated to this division for notification in the official gazette pursuant to Section 31(7) of the Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997 within 30 days from the date of decision. In terms of Sections 31(4) and 31(7) of the Act ibid, approval of federal government is required to file a reconsideration motion before NEPRA for determination and notification of uniform tariff within 30 days of decision by NEPRA.

Accordingly, Power Division submitted a Summary for ECC dated 13th June 2022. ECC in its meeting held on 13th June 2022 considered the summary and recommended that tariff may be passed on to consumers in three phases i.e. Rs3.5/unit in July 2022, Rs3.5/unit in August and remaining increase of Rs0.91/unit in the month of October 2022. The decision of the ECC was placed before federal cabinet for ratification in its meeting dated 17.06.2022, and the cabinet decided that the matter shall be placed before the federal cabinet in the form of supplementary summary, however the same was not placed before the cabinet for consideration. In the meanwhile, this Division was told to submit the case for consideration of the cabinet as table agenda item for its meeting dated 4th July 2022. However, it has been learnt that the same has not been tabled.

In the current scenario, the time limit of one month has lapsed in terms of Section 31 (7) of the Act ibid on 3rd July 2022. It important to note that non-approval of the Government entails certain risks which must be brought to the knowledge of the Prime Minister.

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