Govt Delays Decision to Increase Electricity Prices

The Economic Coordination Committee (ECC) of the federal cabinet on Monday deferred approval of the summary of Power and Energy Ministry seeking up to 26 per cent hike in power tariff.

The ECC was expected to approve the proposed hike in the power tariff, besides according approval to a new categorized billing structure for different types of consumers. However, the forum deferred a decision on the proposed increase in power tariff.

Sources said that the ECC delayed a decision on the Power Ministry’s summary seeking an increase in electricity price till the next meeting of the committee.

The ECC meeting was presided over by Federal Finance Minister Asad Umer with all other members of the forum in attendance.

Power Ministry has moved a summary to the ECC seeking up to 26 per cent hike in power tariff for different categories of consumers.

The increase has been necessitated by the chronic circular debts issue, which is ballooning with each passing day due to low recovery, power theft and other transmission and distribution related losses of the power sector.

Pakistan has already approached the International Monetary Fund (IMF) for a bail-out to fix the deteriorating external accounts and stave off a possible balance of payment crisis in the face of depleting forex reserves.

During its visit last month, an IMF delegation headed by its Washington-based Mission Head has asked Pakistan to raise power and gas tariffs and carry out structural reforms in the energy sector.  So the government is compelled to hike power tariff and cut subsidies as per the Fund’s pre-requisite for a bail-out.

Categorized Billing

However, the cabinet has assured that the new changes in the tariff will be done in a fashion that it should not hit the low-income class as well as the agricultural sector which is the backbone of the country’s economy. This will be done by determining separate tariff for a household based on his monthly consumption.

The new billing structure is as follows:

  • The rates will be the same as before for consumers (lifeline consumer) who have monthly usage of 50 units or less.
  • Up to 100 units usage — additional Rs. 0.87 per unit.
  • Up to 200 units usage — additional Rs. 1.22 per unit.
  • Up to 300 units usage — additional Rs. 2.04 per unit.

Moreover, the Ministry has urged the ECC not to increase power tariff for agricultural tube wells – whatever their monthly usage – as well as a minimal increase for commercial consumers.

In addition, schools and hospitals are likely to face no change in power tariffs.

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