ISLAMABAD: Instead of allowing it to expire on November 30, the government extended the tariff increase that was planned only for the first quarter of the fiscal year, effectively denying customers the cost cut that was attributable to them.
Nepra estimated the financial effect of the overall change to be Rs167 billion, including Rs73bn for the first quarter of 2019-20 and Rs94bn for the second and third quarters.
The Ministry of Energy’s Power Division had recommended to the Federal Cabinet that an additional fee be levied on the vide SRO dated Nov 29, 2019, including an already applicable additional charge.
For the second and third quarters of 2019-20, the federal cabinet approved the remaining power rate adjustment. No extra pressure on customers will be attached to this certification,’ the official statement said.
An official said the previous quarterly change for the first quarter of 2019-20 had expired on Nov 30 and had now been substituted for the next 10 months by a new corresponding rise to reclaim a discount previously given to customers. A summary sent to the cabinet said, “Quarterly adjustment of Rs0.1456/kWh (national average) for Q1 2019-20 expired on Nov 30, 2020.”
The Cabinet was told that the National Electric Power Regulatory Authority (Nepra) had agreed, pursuant to Section 31(7) of the Law on the Production, Transmission and Distribution of Electric Power Act 1997 and the Quarterly Tariff Adjustment Process, periodic quarterly changes for the 2nd and 3rd quarters of 2019-20 involving a cumulative average rise of Rs1,627 per unit for all consumers.
The Cabinet’s Economic Coordination Committee (ECC) approved a proposal to inform on 30 Sept 2020 of a tariff increase of Rs1,627 per kWh across all commodity categories with the exception of life-line consumers.
On Oct 6, 2020, the federal cabinet approved the ECC’s agreement to keep the price of energy unchanged for all customers. Therefore after implementing cross-subsidy and maintaining the additional charges as levied on June 28, 2019, and Sept 30, 2019, the quarterly changes decided by Nepra were approved for notice, so that the electricity price remained unchanged.
The cabinet further ordered that during the current financial year the gap of Rs14.38bn would be modified as an additional subsidy to the power sector. As a result of the ruling, Discos are permitted to pay roughly 14-paisa per unit by replacing the Rs1.48 per unit fee previously existing in the tariff.
With the substitution of the existing 14 paisa per unit charge with a new equivalent fee, Nepra claimed that “adjustments for the second and third quarters of 2019-20 would be fully passed on to customers for the remaining 10 months of the determination,” the Power Division said, adding that the effective rate for customers will remain the same,” but will not decrease either after the expiry of the ex-determination.