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Nepra approves another 83-paisa base tariff hike - Inside Financial Markets

Nepra approves another 83-paisa base tariff hike

– Associated Press of Pakistan

The National Electric Power Regulatory Authority (Nepra) on Thursday allowed another 83-paisa per unit (kWh) increase in electricity rates of Distribution Companies (Discos) of ex-Wapda under quarterly tariff adjustment (QTA) mechanism to generate over Rs84 billion to the bleeding power sector.

This comes a day after the power regulator notified about Rs1.54 per unit increase in power rates for these Discos under monthly fuel cost adjustment (FCA) to generate about Rs11.6bn additional revenue.

On top of the above two decisions, the regulator is expected to issue on Friday its determination on the request of the federal government to jack up base electricity tariff by Rs1.95 per unit for the same Discos to charge yet another Rs200bn to consumers. The government has already announced the said increase, but would be notified once cleared by Nepra. Although a formal request has yet to reach Nepra, a similar (Rs1.95 per unit) increase in tariff would also be applicable to K-Electric under uniform tariff mechanism.

All put together, the total tariff increase, therefore, works to be about Rs4.32 per unit (about Rs296bn). The average tariff for Discos, however, comes out to be Rs16.13 per unit instead of Rs13.35 at present given the fact that FCAs are applicable in tariff on monthly basis and replaced by FCA of next month.

Govt may not pass on the impact to consumers

A senior member of the federal cabinet, however, told Dawn that the prime minister would be requested to absorb the latest increase of 83-paisa per unit determined by the regulator as subsidy in view of Rs1.95 per unit hike already cleared by the federal cabinet and pending notification for want of fulfilling legal and regulatory formalities.

“Knowing the prime minister’s mind, we can hope that the 83-paisa increase under QTA would either go to the circular debt or budget subsidy but not to the consumers,” he said, conceding that electricity tariffs had already gone beyond consumers’ affordability. The regulator also hinted that since the power to impose surcharges by the federal government had been removed through an amendment to Nepra Act, therefore, the government “shall not rationalise the allowed uniform rate of Rs0.8276/kWh upwards for any consumer category”.

In line with QTA mechanism, Discos filed their adjustment requests on account of variation in power purchase price (PPP), capacity charges, variable operation and maintenance costs, use of system charges and including impact of transmission and distribution losses for the 4th quarter of the 2019-20 ie from April to June 2020.

Nepra twice conducted public hearings on Nov 24 and Dec 1, 2020 on Discos’ petitions.

Syed Zaki Hussain

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Inside Financial Markets was a joint publication of Pakistan Stock Exchange (PSX)and Society of Technical Analysts Pakistan (STAP)