ISLAMABAD: The Federal Government is ready to increase the basic electricity tariff for domestic consumers using 201 to 400 units per month by Rs 3.11 per unit by withdrawing part of the subsidy as per the agreement with the Fund international monetary policy (IMF).
This was revealed during a public hearing on the second phase of the subsidy rationalization plan, organized by the National Electric Power Regulatory Authority (Nepra). Chairman Nepra Tauseef H Farooqi, Member Sindh Rafique Ahmad Shaikh, Member Balochistan, Rehmatullah Baloch and Member Engineer KP Maqsood Anwar Khan presided over the hearing.
During the proceedings, it was revealed that the proposed tariff of consumers using 201 to 400 units per month will rise to Rs 15.73 per unit from Rs 12.62 per unit, an increase of Rs 3.11 per unit in due to the elimination of a slab advantage. The plan has already been approved by the Federal Cabinet.
The Power Division team led by Joint Secretary (Power Finance), Mehfooz Bhatti, submitted the following proposals to the Authority: (i) removal of a slab benefit (previous slab benefit) and incorporation of Revised Subsidy by Amended Discos/Uniform Fee Schedule (SoT) as determined by Nepra and notified by GoP, including current SoT on the ground; and (ii) the federal government intends to implement an adjusted tariff effective February 1, 2022.
President Nepra acknowledged that with the implementation of the second phase of the subsidy rationalization plan, domestic consumer tariffs will increase.
“The reduction of subsidies is the prerogative of the government, and Nepra has nothing to do with it. But how can a consumer whose electricity bill will go up with a cut in the subsidy say it’s a good decision,” said Chairman Nepra, who has come under fire for allegedly speaking as a spokesperson. of government instead of the head of the regulator.
Government ‘unveils’ plan to further raise electricity tariffs
Member Sindh complained that the tariff for unprotected consumers was increased by the withdrawal of the subsidy. However, the CPPA-G representative maintained that the tariff increase is the prerogative of the regulator, adding that the tariff for consumers using up to 300 units is Rs 18.05 per unit including QTA.
The tariff for protected consumers, using up to 50 units was Rs 3.95 per unit, 100 units Rs 7.74 per unit and 101-200 units Rs 10.06 per unit. However, now the tariff would be Rs 9.50 per unit for 1-100 units, for 101-200 units it will be Rs 10.36 per unit, 201-300 units will pay Rs 12.62 per unit, 301-400 will be charged Rs 15.73 per unit, 401-500 will pay the rate of Rs 17.19 per unit, 501-600 will pay Rs 18.11 per unit, 601-700 will pay Rs 18.75 per unit and 700+ will be charged Rs 22.22 per unit.
The average increase in the base tariff for domestic consumers will be Rs 0.08 per unit, Rs 0.18 per unit, Rs 0.48 per unit and Rs 0.95 per unit, respectively.
The government will withdraw a subsidy of Rs 20 billion, of which Rs 11.90 billion will come from consumers using 201 to 400 units.
Power Division claimed that currently the government is providing a subsidy of Rs 197 billion, of which Rs 20 billion is being reduced.
The government is also providing a subsidy of Rs 71 billion to protected categories of consumers, which is untouched so far, and the government will continue to provide a subsidy of Rs 254 billion to domestic consumers. The agriculture subsidy and cross-subsidies are not affected at this time.
The number of domestic Discos consumers is 27 million, of which the number of protected consumers, including vital consumers, is 9.9 million excluding KE as of December 2021. The number of consumers in the unprotected category using 300 units is 16.8 million while other consumers using 301-700 units are 632,000. The number of ToU consumers is 418,000.
The amount of subsidy for protected consumers is Rs 8.20 per unit, which amounts to Rs 7.1 million; while 16 million consumers receive Rs 6.14 per unit and their subsidy is estimated at Rs 188 billion for the whole year.
Government to increase electricity tariffs ‘gradually’, says Tarin
Arif Bilwani, a businessman from Karachi, has raised different questions about the performance of the electricity sector and cross-subsidies, arguing that the overall electricity bills of commercial consumers are Rs 45 per unit, which is too much. To this, President Nepra replied that he had raised the issue of taxes in the bills with Finance Minister Shaukat Tarin who promised to find a solution to resolve this problem.
Tanveer Barry, chairman of the public sector utilities electricity and gas subcommittee, said the KCCI rejects any reduction in the total net subsidy for residential consumers.
He said that in 2021, the basic electricity tariff has been increased and consumers in Karachi are already facing heavy fuel adjustment charges and quarterly adjustments. Consumers in Karachi paid Rs 0.75 on September 21 and October Rs 1.0751 fuel adjustment fee and quarterly adjustments for July to September are expected between RS 4 and Rs 5.
Consumers who consume 301 to 700 units will bear 95 paisa per unit and those who use less than 700 units per month are middle and lower class people. People are already dealing with inflation and reports indicate that in 2022 the next phase of the base rate increase will come into effect and there will be more subsidy cuts.
Why is the Department of Energy not announcing the increase all at once, he questioned, adding that all consumer benefits are in court, including rollover fees, the clawback mechanism and the like, so that consumers do not receive any benefit.
Copyright Business Recorder, 2022