[Dawn 29 November 2019] ISLAMABAD: To meet another target before a meeting of the executive board of the International Monetary Fund (IMF), the government on Thursday approved an increase of 26 paisa per unit in electricity tariff, instead of 15 paisa allowed by the power regulator.
This decision was made at a meeting of the Economic Coordination Committee (ECC) of the Cabinet that also further increased wheat support price by Rs15 per 40kg to Rs1,365 and exempted two LNG-based power projects in Punjab from ‘guaranteed take or pay’ of 66 per cent gas quantities to facilitate their privatisation that may add a minimum of Rs117bn subsidy to the budget.
The ECC meeting was presided over by the Prime Minister’s Adviser on Finance & Revenue Dr Abdul Hafeez Shaikh.
On a summary from the power division, the ECC “approved proposal for notifying the Nepra approved quarterly adjustment of 15 paisa per unit after incorporating an additional charge of 11 paisa per unit for maintaining uniform tariff on all categories of consumers except lifeline and domestic consumers”, said an official statement. The increase coming into effect on Dec 1 for 12 months would not apply to about 20 million using up to 300 units per month, out of the total 30m consumers, while 600,000 of the remaining 10m consumers would only pay seven paisa per unit as a result of this increase.
Dr Shaikh also constituted a committee — led by himself and comprising Minister of National Food Security and Research Makhdoom Khusro Bakhtiar, the PM’s Adviser on Commerce and Investment Razak Dawood and Special Assistant to the PM on Petroleum Nadeem Babar — to examine the current framework of determining power tariff and make it more simple, on the pattern of mature markets’ practice for automatic quarterly adjustments.
This is in line with the memorandum of economic, fiscal and monetary policies given to the IMF before its management and executive directors take up for approval a recently concluded agreement between a Fund mission and Pakistan authorities to enable disbursement of about $450m.
As such, the average electricity tariff has now reached Rs13.77 per unit from the current Rs13.51 per unit, excluding general sales tax, monthly fuel price adjustments and some other taxes and duties.
The government has in recent months increased power tariff on account of quarterly adjustments for previous fiscal (2017-18) by about Rs2.33 per unit. The government has also given an undertaking to the IMF to ensure “regular and timely notifications for end-consumer tariffs in the electricity sector” through an automatic mechanism.