Electricity tariff: Burden of Rs142.3b passed on to consumers due to devaluation

ISLAMABAD: The federal cabinet that met here on Tuesday with Prime Minister Imran Khan in the chair was told that the increase in electricity tariff amounting to Rs142.35 billion was passed on to the electricity end consumers in the wake of Pak rupee devaluation.

The Power Division while briefing the federal cabinet members on the increase in electricity tariff said that an impact of Rs 219 billion was transferred to the end power consumers because of the monthly fuel price and quarterly tariff adjustments and 65 percent of Rs219 billion amount standing at Rs142.25 billion was passed to the end consumers only due to the Rupee devaluation, a senior official, who attended the cabinet meeting, told The News.

Many of the cabinet members, he said, had in an earlier cabinet meeting raised the issue of rise in electricity tariff and had sought a briefing on this very issue. Some of the members having agriculture background pointed out that electricity tariff should be exempted from the increase in tariff because of monthly fuel and quarterly tariff adjustments.’

However, the Power Division’s top mandarin told the meeting that Nepra has determined the tariff of agriculture tube wells at Rs15.96 per unit, but because of the government decision, the tube wells tariff was subsidized by Rs5.38per unit. And to ensure concession to the agriculture tube wells tariff, the government is giving some subsidy from the account of tariff differential subsidy (TDS) and the remaining heavy burden of Rs29 billion is being passed on to industrial, bulk and large commercial consumers which is a kind of cross subsidy.

In the meeting, the official said, the Power Division told the cabinet that monthly fuel cost is a pass through item and it is also mandatory under IMF requirements to pass the quarterly adjustment in tariff on to the consumers. The more impact of fuel adjustment and quarterly increase in tariff cannot be passed on to other categories of the consumers as there is no more space to adjust the said increases in the name of cross subsidy. The Power Division also said that cross subsidy, because of reduced tariff of agriculture tube wells at Rs5.38 per unit, amounts to Rs29 billion which is being paid by industrial, bulk and large commercial consumers and causing them increase in cost of doing business.