The government has decided to increase electricity tariff by an average Rs. 1.50 per unit for all ex-Wapda distribution companies’ (Discos) consumers in order to satisfy the protests of Khyber Pakhtunkhwa and Punjab regarding the non-payment of their net hydel profit (NHP).
With the increased tariff, the government is aiming to generate around Rs. 115 billion during the current fiscal year.
According to a government spokesman, this tax raise would produce about Rs. 65 billion that would be payable to Punjab and KP with regards to their NHP.
A sum of Rs. 32 billion would be given to KP and Punjab will get more than Rs. 33 billion. On the other hand, an amount of about Rs. 35 billion will be provided to the Discos on account of write off amounts.
A local news agency was informed by sources which suggested that the Power Division had moved a summary ‘Tariff Determination and Notification for FY 2015-16’ to the federal cabinet.
This decision was taken on the orders of Cabinet Committee on Energy (CCE) headed by Prime Minister Shahid Khaqan Abbasi. The decision was to pass on a major portion of the tax already allowed by the National Electric Power Regulatory Authority (Nepra) to the provinces.
This rise in tariff will most probably be officially approved at the next meeting of the federal cabinet. The regulator will then be given details regarding what increase is to be made for each consumer category. This will be done on the basis of budgeted subsidy that is provided to each type of consumer.
According to sources, provincial representatives filed an official complaint at a recent gathering of the Inter-Provincial Coordination Committee (IPCC) regarding the non-payment of the NHP.
The meeting, which was briefly observed by a source of a local news agency, suggested that Joint Secretary Power Division, Zargham Ishaq Khan, and Member Finance WAPDA, Ikram Khan, were not in favor of releasing NHP for the two provinces in question as tariff notifications had not been issued and neither had the recoveries from Discos been received.
However, JS Zargham said that a summary had already been given over to the cabinet to be passed.
According to the source, the Inter-Provincial Committee’s (IPCC) secretary informed the committee that the word of issuing a resolution for NHP in a matter of 2-3 days had not been kept by the Secretary of Water Resources. This was on the federal government’s part because of the transfer of the official in question.
According to official records, “Chief Minister Khyber Pakhtunkhwa, Secretary Energy Punjab and Special Secretary Finance Punjab insisted upon immediate release of NHP as they had already incorporated in their development budgets for the ongoing financial year,”
The Ministry of Finance has been approached by the IPCC to deal with the payment of Rs. 80bn to the two provinces in regard to NHP.
It was decided in the meeting that Finance department was responsible for the payment of Rs. 31.839 billion, that includes Rs 16.829 billion arrears of 2015-16, 2016-17 and Rs 15 billion for the five months 2017-18, on account of NHP to KP.
This amount is to be recovered by the Central Power Purchase Agency (CPPA) and Wapda from monthly recoveries of the tariff.
The meeting also finalized the decision that federal government and Wapda would pay a sum of Rs. 33.2 billion on account of NHP to Punjab that includes Rs 14.86 billion arrears and Rs 18.5 billion regular annual NHP for 2016-17 and 2017-18.
According to the increased rates, the new average tariff for Discos will rise up to Rs. 12.90 per unit.