Staff Report
ISLAMABAD:
Power consumers would face Rs 1.39 per unit hike in power price from November 2021 and the federal cabinet, through circulation summary, has granted its approval in this regard.
According to sources, cabinet has approved power tariff hike from November 2021 through circulation summary prepared by the Ministry of Energy.
Based on the consolidated revenue requirements of power distribution companies (DISCOs) as well as the economic and financial policy of the government, the tariff differential subsidy (TDS) was proposed to be modified and reduced through the circulation summary.
The cabinet was also apprised that for the period Jul-Oct 2021, the net subsidy amounting to Rs 102 billion and for the period effective from November till June, subject to implementation of this proposal, the net subsidy for Nov 21 to June 2021 shall amount to Rs 67 billion. In aggregate the subsidy requirement will be reduced from Rs 240 billion to Rs 168billion, said sources.
Speaking in a press conference along with the State Minister for Information and Broadcasting Farrukh Habib, Minister for Energy Hammad Azhar said that the government has given go ahead to NEPRA to increase electricity tariff by Rs 1.39 per unit from the next month mainly because of mounting circular debt and costly power houses installed by the last government. However, he said that this increase in power tariff will not be applicable to the lifeline and domestic consumers who use less than 200 units of electricity in a month and in this way this increase is not applicable on 46% of the consumer base. This hike in the power tariff will also not affect the seasonal electricity package or the industrial package, said Energy Minister.
He added that NEPRA had already recommended an increase of 3.5 rupees per unit in March.
The energy Minister also said that the government had to increase the electricity tariff because of the costly power houses installed by the last government and the government has been making efforts to reduce the circular debt.
“Major portion of the circular debt is also because of capacity payments and because of the wrong decisions taken by the previous governments,” said Azhar, adding that the government has to increase power tariff to control the circular debt.
The minister for energy further said consumers would be supplied electricity at discounted rates during the winter a seasonal electricity package. He said that enough capacity of electricity generation is available and focus of the government is to increase the electricity demand.
“The government had introduced an industrial package last year which remained successful and an increase in the demand of 15% was seen,” said Hammad Azhar, adding,” Meanwhile, we have also seen a 6-7% increase in the demand for electricity as the peak hours for the industrial sector have been removed.”
Energy Minister Hammad Azhar also announced that it had been decided to halt all the ongoing schemes and new connections of sui gas companies until legislation for the new mechanism was completed. The government has planned to introduce a new pricing mechanism to bill consumers for imported gas.
“Local gas reserves [are] depleting at a rate of 9pc per annum. Govt does not have legal mechanism to collect costs of imported gas from consumers. We have forged a consensus on new pricing mechanism but till its legislation, govt is halting all expansion in domestic gas networks,” he said in a tweet.
The Energy Minister also said that currently only 28pc of the total households are getting piped gas while local gas reserves had been depleting at a fast pace as now this commodity (gas) is now insufficient for fertiliser and other industries.
Hammad Azhar further announced that the government would bring a new pricing mechanism to bill consumers for imported gas. He said that it had been seen over the past years that the induction of imported gas into the pipelines had caused a loss of Rs35-40 billion to sui gas companies while the utilities couldn’t charge the consumers separately for the imported gas. He said this (new pricing mechanism) is called weighted average cost. Legislation on the matter was pending and until the system was introduced, the expansion of domestic gas networks had been halted.
About the reports of gas shortage due to insufficient procurement of Liquefied Natural Gas (LNG), Hammad Azhar said that enough LNG was in the system while currently, not only Pakistan the entire world is facing a gas crisis because the supply of gas has been affected due to COVID-19, while prices also surged.
“In order to resolve the gas crisis issue, we are blocking all ongoing and future gas schemes and planning to change the law to provide LNG to domestic consumers whilethe government is working on the North-South Gas Pipeline Project with Russia,” said Energy Minsiter Hammad Azhar.
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