Power tariff bomb set to explode this week

January 19, 2021

ISLAMABAD: After increasing POL prices twice this month, the government is now all set to explode the power tariff bomb on the masses in the current week, as Power Division has prepared a summary seeking the ECC approval for increase in the new base tariff by Rs1.90 per unit setting new base tariff at Rs15.25 per unit, well-placed sources at Energy Ministry told The News.

“The existing base tariff of electricity power distribution companies (DISCOs) stands at Rs13.35 per.” However, they said, the government is likely to notify today (Monday) the increase in uniform power tariff of DISCOs by Rs1.80 per unit jacking up the uniform tariff to Rs13.55 per unit from Rs11.75 per unit.

The Nepra has determined the new raise in uniform tariff of DISCOs at Rs13.55 per unit keeping in view the new differential tariffs of all DISCOs. After increasing the uniform tariff, the ECC, will also decide the volume of inter-disco tariff differential subsidy to maintain the new uniform tariff.

The difference between new base tariff and new uniform tariff will be bridged through the subsidy. “Yes, we have prepared the summary that is to be pitched in the ECC meeting in the current week for approval and then it will be ratified by the federal government that is to be announced with the nod of Prime Minister Imran Khan.”

This will help pave way for restoration of $6billion IMF program that got suspended in February 2020. The government under the IMF demand will have to increase the power tariff by Rs3.34 per unit lifting the base tariff up to Rs16.75 per unit in two phases.

However, in the current week the government will increase Rs1.90 per unit, exposing the masses to a new financial burden of Rs190 billion. The remaining tariff of Rs1.40 per unit will be increased somewhere before June 2021 passing more financial burden of Rs140 billion on to masses further jacking up to base tariff up to Rs16.75 per unit.

This means that the government will also increase the new uniform tariff by Rs1.140-1.50 per unit in June 2021. The two-time increase in tariff will help reduce the circular debt by Rs340 billion.

The circular debt now stands at Rs2.4 trillion. The experts are saying if corrective decisions are not taken, then circular debt will swell to close to Rs2.8 trillion by June 30, 2021.