Govt likely to hike power tariff from Rs4 to 6 per unit today

ISLAMABAD: After the IMF has approved a $3bn SBA loan and a $1.2 billion tranche has been received by the State Bank of Pakistan (SBP), but the decision on an increase in base tariff is still awaited.

“IMF wants the government to raise the required hike in power tariff at any cost and the government has no option to escape it,” the relevant top official told The News.

However, The Nepra and the Finance Ministry officials spent the whole day of Thursday reaching a consensus about the increase in base tariff for the financial year 2023-24 in the manner that the hike in the tariff should not be on the higher side but at a lower side based on realistic figures of dollars value, inflation and GDP growth and growth in the sale of electricity in FY24. “If the base tariff is kept at the lower side in the range of Rs4-6 per unit, then monthly fuel charges adjustments and quarterly tariff adjustments would be at the high side, and if the base tariff is announced between Rs6.5-7 per unit, and the consumers will have to pay FCA fluctuation in paisas.

Both sides, he said, have almost agreed on the consensus draft about the hike in the electricity base tariff and the regulator is most likely to fine-tune the draft today (Friday) and may announce the new base tariff on the same day.

Since the caretaker regime would take charge of the country by 13 August and the ruling coalition will get the masses to win the elections and that’s the main reason the government wants to keep a hike in base tariff at the lower side. “Some members of the regulator also want the new base tariff not on the high side.”

When asked as to why the regulator has not used the dollar’s value at Rs290 on which the federal budget was made, the official said that after approval of the SBA programme by the IMF, the situation has changed and the dollar’s value will come down which now stands at Rs277 and the declining trend may also help decrease the inflation in FY24. In the budget, inflation has been estimated at 21 percent and GDP growth at 3.5 percent.

Earlier, the regulator had worked out three scenarios for a new base tariff which include below Rs8 per unit, below Rs7 (Rs6.91) per unit, and below Rs6 per unit.

Before that, it also worked out the increase in base tariff in the range of Rs4-5 per unit.

Now under the new scenario, both the Nepra and the Finance Ministry have agreed to a consensus draft about the hike in the electricity base tariff and the regulator is likely to announce today (Friday) the increase in the tariff.