ISLAMABAD The government has chosen to reverse the roughly 51 percent rise in energy tariffs it had approved last week for so-called protected consumers due to public uproar and possible political reaction. This measure was necessary in order to comply with an International Monetary Fund (IMF) “prior action” requirement.
A updated summary, including for “protected consumers” whose consumption stays below 200 units per month, will be expeditiously sent via the federal cabinet, which only approved the significant tariff hike last week, per the prime minister’s directions.
The National Electric Power Regulatory Authority (Nepra) changed the schedule of a public hearing from July 8 to July 10 within this context. The power division requested a hearing for an average rise of Rs5.72 per unit, with higher-end domestic and other consumer categories subject to an increase of Rs7.12 per unit. Nepra has been ordered to wait for the updated summary.
Sources claim that the PM was informed by other entities, aside from the electricity division, that customers were already quite irate due to piling bills resulting from public holidays during Eidul Azha, as well as increased usage during hot and muggy weather. In certain places, they had previously used violence against distribution company executives to vent their rage.
The prime minister gave orders on Monday morning to amend the rate increase summary that was previously submitted to Nepra and exempt protected users from the hike before taking off from Islamabad for Quetta. The power division distributed the report as directed by the evening. The government would use both creative rate setting and subsidies to make up the approximately Rs50 billion income shortfall that resulted.
As part of the IMF’s “prior action and structural benchmark,” the tariff hike must take effect for all ex-Wapda distribution companies (Discos) and K-Electric on July 1, 2024. The public hearing is merely a formality, as the Nepra itself determined that a 20 percent (average of Rs5.72 per unit) increase in the uniform national tariff would ensure that the 10 Discos would receive approximately Rs3.8 trillion in funding for the fiscal year 2024–25.
The tariff was supposed to be raised by 51 percent for “protected consumers” using up to 100 units per month and by 41 percent for protected consumers using up to 200 units per month, according to the tariff adjustment summary that the federal cabinet approved through circulation. This category includes more than 15.5 million consumers, of which 10.11 million reside in less than 100 units and 5.5 million in 101–200 units. These consumers are below this barrier and are free to use the roadways at any time.
However, individuals unlucky enough to over 200 units even once every six months are classified as “unprotected category.” The largest rise of more than 43 percent (or Rs7.12) to Rs23.6 per unit (kilowatt-hour, or kWh) has been proposed for the first 100 units in the “unprotected category,” which entails an additional 5.95 million consumers.
The tariffs for the 101-200 and 201-300 slabs will then increase by 31 percent and 27 percent, respectively, to Rs7.12 per unit and Rs30.1 per unit, respectively. These two groups comprise five million more customers.
Customers in the next five household groups, which include those with 300 units or more, would pay an increase of 14 percent to 22 percent (Rs6.12 per unit) in addition to a new fixed capacity tax of Rs200–1,000 per kilowatt capacity.
A set price of Rs. 400 per kilowatt would be applied, with the monthly charge rising to Rs. 5,000 based on the approved load capacity. Agricultural customers will also see a tariff hike of 19–44 percent (about Rs5.75 to Rs6.59 per unit) and be subject to a fixed capacity tax of Rs400 per kilowatt.
Instead of the current cost of Rs400–500 per kilowatt, all other customer categories, including commercial, general services, industrial, and bulk, will be subject to a set capacity price of Rs1,250 per kilowatt. The cost for commercial and general services will rise by 17% (or Rs5.89 per unit) to approximately Rs44 in addition to this increase in capacity charges.
However, the off-peak cost for all other industries above 25 kilowatt capacity would increase by 8-11pc (Rs2.64 to Rs3.56 per unit), while the peak rates would stay the same. In contrast, the industrial price for the B1 category would be cut by 6-8pc (Rs2-2.65pc) to Rs31.65 per unit.
According to the power division, the proposed tariff will bring in Rs3.5 trillion to 10 Discos in revenue this fiscal year, or roughly Rs580 billion more than it did the year before. In addition to any additional modifications in the form of monthly fuel charges and quarterly price adjustments for exchange rate, inflation, and other variables, the total revenue would be around Rs4.2tr after the impact of 18% GST.
An official stated that the real, applicable average national tariff would now be between Rs65 and Rs72 per unit after including surcharges, taxes, duties, and levies, as well as monthly and quarterly adjustments. The average national base tariff, including for K-Electric, has now been worked out at Rs35.50 per unit for this fiscal year, against Rs29.78 per unit for the previous year. This would yield about Rs3.763tr in revenue to 10 Discos this fiscal year, compared to Rs3.28tr last year.
