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July 4, 2020

ECC approves hike in K-Electric power tariff to Rs2.89 per kWh

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July 4, 2020

ECC approves hike in K-Electric power tariff to Rs2.89 per kWh. Photo: PID.

ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet approved hike in the K-Electric tariff to Rs2.89 per kilowatt-hour (kWh) on Friday. With this new notification, the tariff per kilowatt-hour (kWh) for various categories of consumers will surge from Rs1.09 to Rs2.89.

The ECC also approved Rs29.72 billion for cash assistance of Rs12,000 per beneficiary to 3.725 million applicants irrespective of provincial, regional and district quota under the Ehsaas Emergency Cash Programme. It also decided to take up issue of sale of RLNG to domestic gas consumers and pointed that it was causing losses of over Rs73 billion to SNGPL, thus creating another new shape of monster of circular debt. It decided to form small group of ministers to discuss this issue with the purpose to find out solution. One of the options on the table is to make this shortfall as part of tariff and charge from consumers by burdening them more. According to official announcement, the ECC chaired by Adviser to the Prime Minister on Finance and Revenue Dr Abdul Hafeez Shaikh allowed the BISP to spend Rs29.72 billion from its allocated budget of Rs200 billion for 2020-21 for providing cash transfers to 3.72 million applicants with the instruction that any additional requirement for regular operations of BISP would also be provided during 2020-21. The decision came after the Poverty Alleviation and Social Safety Division told the ECC that 3.151 million applicants who had applied for assistance through the SMS, were found eligible under the approved criteria but these applicants could not be provided assistance on account of provincial/district quotas.

The ECC was told that the Punjab government had already agreed to provide assistance to 700,000 of the applicants identified through SMS, leaving 2.451 million eligible applicants who could be provided cash assistance @12,000 (Rs3,000 for four months) at a total cost of Rs29.72 billion.

During the meeting, the ECC also took up a proposal for policy guidelines with respect to sale price of RLNG. The ECC was told that given the ring-fenced nature of RLNG and indigenous gas pricing, the sale of RLNG to domestic gas consumers at weighted average domestic tariff/gas sale price on M/s SNGPL network had resulted in accumulative tariff differential/RLNG revenue shortfall of Rs73.84 billion for the period July-2018 to April 2020. The ECC was further told that this revenue shortfall had occurred after adjustment of RLNG impact on cost neutral basis as per the policy whereby the SNGPL sold indigenous gas as RLNG to its consumers and recovered some of the revenue shortfalls whenever the surplus system gas became available.

The ECC was also briefed that the issue of RLNG revenue shortfall had arisen mainly because of the price differential in domestic gas as 91 percent of the domestic gas consumers had been paying an average monthly bill of Rs121, which was many times less than the price of imported RLNG supplied to domestic consumers in the winter months.

The ECC considered the proposal and asked the Ogra to review it, especially the RLNG revenue shortfall as worked out by the SNGPL, and report back to ECC. The ECC also decided to further discuss the issue in a small group in order to develop a consensus-based solution to the issue for a policy decision at the government level to avoid the creation of a circular debt situation in the RLNG sector.

The ECC also took up and approved a proposal by the Ministry of Information Technology and Telecommunication for NTC’s budget for the FY 2020-21 (Budget Estimate Revenue Rs4.59 billion, operating cost Rs4.38 billion and ADP Rs1.23 billion) and NTC budget for FY 2019-20 (revised estimates revenue Rs3.95 billion, operating cost Rs3.93 billion and ADP Rs1.08 billion).

The ECC also took up a proposal by the Ministry of Industries and Production, which submitted that as per the data furnished by National Fertilizer Development Centre (NFDC), the national inventory for urea fertilizer would be below the buffer stock level of 200,000 metric tonnes in the months of December 2020 to February 2021. The ECC decided that in order to cover this gap and maintain the buffer stocks at the required level, gas at rate of Rs756 MMBTU be provided to two shutdown plants at SNGPL networks, namely Agritech and Fatima Fertilizer, for three months w.e.f. July-September. This would involve the GoP’s share at Rs959 million much less than the revenue spent previously on using these plants to produce the urea fertilizer to cover up shortage.