Govt to raise Rs2 per unit on power tariff to collect Rs200 bn

ISLAMABAD: Another wave of power tariff hike is in the offing, as the government has decided to recover Rs200 billion from power consumers on account of capacity payments by increasing the tariff by Rs2/unit in months to come.

It is pertinent to mention that in October 2018, this government had passed on Rs1.27 per unit increase in electricity rates to power consumers to recover Rs226 billion.

For collecting this Rs200 billion, the National Electric Power Regulatory Authority (Nepra) has held a public hearing this month for increasing the tariff on account of capacity payment to the power producers which was pending during the last one and a half years, Federal Minister for Power Omar Ayub Khan said this while talking to the media here on Tuesday.

Nepra has taken this decision in the previous government tenure but the PML-N government did not pass it on, terming it an unpopular decision due to elections. Omar Ayub said, “We are not going to transfer the entire burden in one go and instead the increase will be transferred in quarterly basis.” He said that the first increase will be passed on the consumers during next three months. The power sector’s circular debt currently stands at Rs1,410 billion. The banks’ loan stands at Rs603 billion parked into power holding and the circular debt is Rs807 billion. He said the government had released Rs200 billion to energy companies to reduce the circular debt and the government had also a plan to issue bonds to raise another Rs200 billion to address the issue of circular debt.

He said the government is paying the expensive loans first and claimed that the circular debt would be reduced to Rs225 billion by December 31, 2019.

The delay in power tariff and electricity supply to consumers on high loss feeders were the two main reasons for the ballooning circular debt, Omar Ayub Khan said. The government has been taking measures to increase recovery and reduce losses. Due to anti-theft drive, the recovery of power distribution companies (DISCOs) had increased by Rs40 billion during the last three months. The minister alleged the PML-N government for placing a cap on renewable energy, which blocked dozens of projects. “After we lift the cap on renewable energy projects, 600MW would be added to the national grid from renewable resources in near future on fast track basis,” he added.

To a question that whether the government would exercise the load management [loadshedding] in coming summers, minister replied, yes, we would do load management on high loss making feeders. The government is also working on a new renewable energy policy, which would be finalised by next month. “We are targeting to increase share of renewable in our energy mix to 20pc by 2025 and then to 30pc by 2030. While adding 30pc hydel sources, it would reach up to 60pc. It would reduce the power cost and also reduce our dependence on imported fuel and expenditure on its import for power generation,” he said.

He also said that on bringing automatic metering infrastructure, a task force is working. In Peshawar Electric Supply Company (Pesco), in three circles, including Khyber, Bannu and DI Khan, power theft is high for which we are going to install Aerial Bundled Cables (ABC), he added. He said that more than 20 thousand FIRs had been lodged against power thieves, 2,000 have been sent behind bars in which 450 employees were of Discos.

He said that in Balochistan, work on converting 29,000 grid-based agriculture tubewells to solar power system is being done and it would be accomplished in the next two months. Currently, the federal and provincial governments are hugely subsidising them, and after this conversion, these billions of rupee subsidy would be saved for other development works.

He said, “Besides, the government has also allowed that the AJK would be provided Rs1.10/unit water use charges and it would be charged from the Islamabad Electric Supply Company (Iesco). We have also released Rs20 billion Net Hydel Profit (NHP) of KP province and would clear the remaining gradually.”

He said, “We are also breaking some Discos which are low performing feeders of which high length of feeders is one of the reasons for their low performance. So we would break them in small lengths to reduce their line losses, improve voltage and their monitoring. This would be carried out in Pesco, Qesco, Mepco and Lesco.

“Besides, we are negotiating with the World Bank for a project for energy accounting, including installing metres on transformers, as to make power monitoring easy and control power losses and improve revenues,” he said, adding that there are around 860,000 transformers.