Power tariff needs 25.1pc hike to end losses to zero level

ISLAMABAD: The government has estimated that it will have to hike electricity tariff by 25.1 percent over the next four months (March to June), bringing it Rs16.24 per unit from the existing level of Rs12.98 per unit in order to bring down the flow of power sector losses at zero from July 1, 2019.

“The net proposed increase in power tariff will be standing at Rs3.26 per unit as total tariff will then be standing at Rs16.24 per unit from Rs12.98 per unit,” top official sources confirmed to The News here on Sunday.

This figure of 25.1 percent proposed increase in electricity tariff has been worked out by the Ministry of Power in consultation with the Finance Division in order to bring down the flow of power sector losses at zero in line with the IMF conditions.

The working done by the Ministry of Power showed that this tariff adjustments of 25.1 percent will be in addition to the monthly fuel price adjustments (FPA), which will result an increase of Rs1.9 per unit if gas is supplied at 850mmcfd for April, May and June 2019.

The impact on the consumer would be an increase of average per unit price from Rs12.98 per unit to Rs13.85 per unit in ongoing month (March 2019) and then to Rs15.31 per unit in June 2019 to stop flow to quarterly adjustments.

The Ministry of Power estimated that the flow of power sector in the current fiscal year 2018-19 would be standing at Rs223 billion (Rs2.14 per unit) and flow in the next fiscal 2019-20 would be estimated at Rs97 billion (Rs0.94 per unit) after taking some initiatives to bring desired reforms in the cash bleeding power sector.

“To make flow to zero starting from next financial year from July 1, 2019-20 in addition to quarterly adjustments notifications, an additional increase of Rs0.94 per unit in tariff will be required,” the ministry’s assessment shows.

Further, 613,314 metric tons oil has been consumed during December 2018 and January 2019 because of less gas supply. It has reduced the stocks of import of residual furnace oil (RFO) down to 32,000 metric tons at different power plants including Jamshoro, Hubco and others.

It has also been estimated that the RFO requirement will further decrease in case of increased gas supply up to plus 1,000mmcfd. The official working about requirements of gas and furnace oil shows that the RLNG requirements were estimated at 848mmcfd for March 2019, 1,043mmcfd for April 2019, 1,170mmcfd for May 2019, and 1,088mmcfd for June 2019.

The RFO requirement has been estimated at 1,247 metric ton per day, 1,336 MT/per day in April 2019, 5,627 MT/per day in May 2019 and 2,696 MT/per day in June 2019. The RFO plant stocks estimated at 6,000 MT/per day in March 2019, 2,500 MT/per day in April 2019, 2,500 MT/per day in May 2019 and 500 MT/per day in June 2019.

The power generation which stood at 121 billion units in last fiscal year 2017-18 has now been estimated to go up to 130 billion units in the ongoing fiscal year 2018-19 with distribution of 65 billion units during July-December 2018 period and 65 billion units in Jan-June period of 2019.

It has been projected that the power generation will further go up to 132 billion units in the next financial year 2019-2020 with 69 billion units in generation in July-Dec 2019 and 63 billion units in Jan-June 2020.

With an increase in generation, transmission system losses can increase from 2.5 percent to 2.8 percent if no improvement was brought in the national transmission system. The units sold to power distribution companies (Discos) and K-Electric which stood at 118 billion units in 2017-18 were estimated to go up to 126 billion units in ongoing fiscal year. It has been projected that the units sold to Discos/KE might go up to 128 billion units in next fiscal year 2019-20. With increased number of units being sold to Discos, the losses might surge due to non-investment in the distribution system over last so many years.

The units sold to consumers stood at 99 billion units in 2017-18 that were expected to go up to 105 billion units in ongoing fiscal year 2018-19. The units sold to consumers might go up to 108 billion units in next fiscal year 2019-2020.

The failure to bill all units due to power theft also resulted into difference between units sold to Discos and to the power consumers. This correspondent made attempts to contact the Ministry of Finance and Ministry of Power and sent out messages to them several hours before Sunday noon but got no formal response from anyone till filing of this report.