ISLAMABAD - The Economic Coordination Committee (ECC) of the Cabinet on Tuesday deferred the decision of increasing power tariff for one week.

The ECC meeting, chaired by Finance Minister Asad Umar, deferred the difficult decision of increasing power tariff for one week after recently enhanced gas prices and announcement of mini-budget. In recent past, the PTI-led government had increased the gas prices up to 143 percent. Later, it had announced a mini-budget with new taxation measures of Rs183 billion. The ECC was proposed to enhance the power tariff.

The government has a plan to increase power tariff by Rs2 per unit to partially finance the ever-rising circular debt. Prime Minister Imran Khan had already given a go-ahead signal for notification of base tariff increase for Discos on the basis of a briefing given by the Power Division and Nepra with an impact of about Rs2 per unit or Rs200 billion on the existing power rates.

On the proposal moved by the Ministry of Energy for the “Tariff Rationalization for Power Sector” ECC directed NEPRA and Power Division to prepare a comprehensive plan for improvement in the service delivery in the power sector, reduction in transmission and distribution losses and maximizing recovery. The Committee also directed the Power Division to ensure that while preparing the plan for any increase in power tariff; it should be ensured that the poor and lower end consumers are not unnecessarily burdened.

The consideration of Ministry of Power’s proposal regarding notification of NEPRA determined tariff was pended till finalization of the aforesaid plan.

The government wants to increase power tariff to reduce the circular debt.

The circular debt had accumulated over the years to a high level of Rs1,178 billion including fresh flow of Rs596 billion and old stock of Rs582 billion parked in the special purpose vehicle — Power Holding Company Ltd.