Daily Times

While criticizing the government’s decision to make another raise in electricity tariff, the Federation of Pakistan Chambers of Commerce & Industry’s Businessmen Panel (BMP) has urged the NEPRA to reverse the decision of hike in power charges, as it has increased tariff of power Distribution Companies by Rs4.56 per unit as part of the December fuel adjustment to recover Rs76 billion from trade and industry.

FPCCI former president and Businessmen Panel (BMP) Chairman Mian Anjum Nisar observed that this change in tariff will cause an additional burden of Rs40 billion on consumers. He added that it is unfortunate that during last two months, electricity prices have gone up by Rs8.69 due to fuel price adjustment. In November alone, the electricity tariff was raised by Rs4.13. In just two months, the power tariff raise has put an additional burden of Rs76 billion on consumers.

Mian Anjum Nisar said that the requests from these firms have come amid a prevailing inflation rate of 30 percent, suggesting that official estimates of declining inflationary trends might be less forthcoming because electricity and gas rates have a major contribution to the price baskets.

Besides, the State Bank of Pakistan (SBP) has kept its policy rate unchanged at a record 22pc, citing frequent energy price hikes that keep inflation at elevated levels.

In their separate tariff petitions, the Discos have sought to rise about Rs81.5bn from their consumers in three coming months under the quarterly tariff adjustment for the October-December 2023 period.

This is also on top of about a Rs6.5 per unit monthly fuel cost increase for the billing month of February that currently awaits a decision by the National Electric Power Regulatory Authority (Nepra). The regulator has accepted the respective tariff petitions and has called public hearings on Feb 14 to see if the proposed increase in tariff is justified in line with the quarterly tariff adjustment mechanism. The quarterly adjustments for Discos now also apply to K-Electric consumers as well under recent government and regulator decisions.

The Discos have sought the increase to finance the additional financial impact of capacity charges arising out of currency devaluation and the interest rate hike besides the market operator fee, the impact of transmission and distribution losses on fuel cost adjustments, the cost of incremental consumption and variable operation and maintenance charges for the second quarter of the current fiscal year.

At present, the consumers are paying about Rs3.28 per unit QTA for the fourth quarter of the last fiscal year that would remain applicable for six months – from October 2023 to March 2024 – to mop up more than Rs200bn from power consumers across the country, including those of K-Electric.

Another QTA for July-September 2023 is also being charged to consumers at the rate of Rs1.15 per unit for the billing period of January to March 2024 to raise another Rs22.3bn.

Under the petitions, the Disco from Lahore has demanded the highest claim of Rs15.1bn, followed by Rs14.9bn by Multan Electric, Rs11.6bn by Peshawar Electric and Rs11bn by Quetta Electric.

These are followed by a Rs9.45bn claim filed by Faisalabad Electric, Rs6.92bn by Islamabad Electric, Rs3.5bn by Hyderabad Electric, Rs3.5bn by Tribal Electric, Rs2.9bn by Sukkur Electric and Rs2.7bn by Gujranwala Electric.

The biggest chunk of additional cumulative burden on account of capacity charges has been claimed by Discos at Rs75bn for the quarter, followed by Rs10.8bn on account of the uncovered impact of transmission and distribution losses and Rs6.6bn on account of the use of service charges and market operator fee.

On the other hand, Discos have offered Rs8.7bn worth of negative variable operation and maintenance charges and Rs2.34bn worth of impact of incremental sales, thus working out a cumulative net additional demand of Rs81.5bn. On approval, the adjustment would be recovered on a uniform basis from all consumers except for lifeline users.

The BMP chairman said the government’s decision to increase the electricity tariff is anti-industry, and the BMP strongly condemns the government’s move and calls on it to rescind it. He urged the power ministry to identify system constraints and communicate targets to all concerned departments in order to launch a wartime effort to upgrade the transmission system. It is to be noted that the authority conducted the hearing in the matter on November 29, 2023, wherein the data submitted by the CPPA-G came under scrutiny. According to reports, the NEPRA reviewed the request by CPPA-G seeking monthly FCA and due diligence was done accordingly. From perusal of the information so provided by CPPA-G, the actual pool fuel cost for the month of October 2023, as claimed by CPPA-G, is Rs11.4277/kWh, against the reference fuel cost component of Rs7.8938/kWh. The actual fuel charges, as claimed by CPPA-G, for the month of October 2023 increased by Rs3.5339/kWh as compared to the reference fuel charges.