Curtailing circular debt: Govt set to hike overall power base tariff

ISLAMABAD: The government is all set to increase the overall base tariff of electricity somewhere in November or December, unfolds a preliminary draft prepared on Road Map to Reforms in the power sector with the main focus on fundamental restructuring to deliver load-shedding free affordable energy to consumers till 2023.

The draft, a copy of which is exclusively available with The News, pleads that the surge in base tariff will help curtail circular debt that has risen to Rs2.4 trillion. The detailed projections are under development in terms of tackling circular debt and cost of electric power as the draft is not yet finalized but the preliminary draft has suggested the increase in base tariff of electricity that is expected in November or December this year.

More importantly, the base tariff for agriculture and residential consumers will also be changed by December this year. However, the government also under the reforms is all geared to introduce the paradigm shift in existing mechanism of ending the subsidy to various categories of consumers and to this effect it will change the subsidy slabs and redefine protected consumers (Agriculture and Residential below 200kWh/month). And instead, it will introduce direct subsidy mechanism linking Ehsaas program for cash transfers to the consumers belonging to the vulnerable class and in line with the new mechanism the base tariff for agriculture and residential customers will be changed.

The draft also discloses that the captive power plants will also be shifted on to the national grids. With regard to achieving the target of zero demand-supply gap in Karachi, the draft also mentions that 900MW LNG Power Plant for Karachi is being built and to this effect 150MMCFD GSA (gas sales agreement) with SSGC/PLL will be executed with KE and the said project will come on stream by March 2021 and the old inefficient units of K. Electric will be decommissioned.

In addition, fast-track development of 500KV & 220KV grids to supply additional power to Karachi is being focused, which will help supply electricity of 2,200MW from national grid to KE by March 2022.

However, the project of interconnection enhancement to supply a total 1,100MW to Karachi from the national grid will be operational before summer 2021. This will provide massive ease to Karachiites.

The state-owned Discos, Hesco, Sepco, Mepco, Quesco and Pesco are contributing 62 percent share to the circular debt, whereas overall Discos contribution to the circular debt stands at 25 percent on average.

The government of the day is in the process of replacing the BoDs of all the Discos and appointing their new CEOs. In addition, the government is also advancing towards appointment of MDs of NTDC and Pepco.

The new IPPs will be based on renewables (Solar, Hydropower, Wind, Biomass) – depending upon the evolution of technology. As for the development of Competitive Power Market, the preliminary draft says the legal framework will be in place soon.