Power tariff hike to generate Rs144bn

ISLAMABAD: The government has decided to increase electricity charges and set a target of generating Rs144 billion during the current financial year through a two-phase tariff rationalisation plan. According to a summary prepared by the government, the tariff for industrial and commercial sectors will be increased by up to 99 per cent from August 1. In the second phase, the rates for domestic and agricultural consumers will be raised by up to 117pc from October 1. The implementation of the plan will reduce subsidy to Rs252bn from Rs396bn (estimated without tariff increase). This will take the total revenue of all distribution companies (excluding KESC) to over Rs1 trillion from Rs875bn under the existing tariff. Three basic principles have been adopted in the plan. The industrial tariff will be increased by between 25pc and 98.42pc depending on various slabs and categories so that there is “zero subsidy on budget” for the industrial sector. To achieve this, the National Electric Power Regulatory Authority (Nepra) has approved the minimum determined tariff (MDT) of the best performing distribution company plus 81 paisa penalty in the name of equalisation charge on each unit of electricity to cross-subsidise inefficient power companies. The tariff for commercial, bulk and other consumers will be jacked up to the level of MDT for the best distribution company (generally the Islamabad Electric Supply Company) so that the overall budgeted subsidy in these sectors comes down, but not completely eliminated as in the case of industry. For example, Azad Kashmir will see the highest gross tariff increase of about 117pc, although a part of it will be settled through a special arrangement with the federal government. AJK’s peak time-of-day (TOD) will be increased by 35pc to Rs18 per unit, and off-peak rate by 51.5pc to Rs12 per unit. The commercial tariff will increase between 22pc and 65pc.The tariff for agricultural and domestic consumers will remain unchanged, but in some cases will go up by more than 72pc in October. Despite the massive jump in rates, the domestic sector will still get around Rs50bn subsidy. COMMERCIAL: The tariff for commercial consumers will be increased to Rs18 per unit from the current notified tariff of Rs14.77, up 22pc. Regular 20kw commercial rates will go up by almost 65pc to Rs16 per unit from Rs9.72. The TOD rate for commercial consumers will be increased to Rs18 per unit from Rs13.20 for peak consumption while off-peak rates will go up to Rs12.50 per unit from Rs8.01. Temporary commercial rates will remain unchanged at Rs15 per unit. INDUSTRIAL: With the addition of 81 paisa per unit equalisation surcharge for all industrial consumers, the tariff for B-1 consumers will increase to Rs15.31 per unit from Rs10.51. The B-1 TOD peak rate will increase to Rs18.81 per unit from Rs13.99 while off-peak rate will jump to Rs16.31 per unit from Rs8.22. The B-2 tariff will go up to Rs14.81 per unit from Rs9.14; B-2 TOD peak rate to Rs18.81 per unit from Rs12.77 and off-peak rate to Rs13.11 per unit from Rs8.01. The B-3 TOD peak rate will increase to Rs18.81 per unit from Rs12.68 and off-peak rate to Rs10 per unit from Rs7.75. The B-4 TOD peak rate will increase to Rs15.31 per unit from Rs12.37 and off-peak rate to Rs9.91 per unit from Rs7.46. SINGLE-POINT BULK: The C-1 (A) tariff will be increased to Rs13 per unit from Rs11.50 and C-1 (B) rate to Rs11.50 per unit. Its TOD peak rate will increase to Rs15 per unit and off-peak rate to Rs9.30. The highest increase in this category has been made for C-3 of 60/132kv supply by 24pc to Rs9.10 per unit and C-2 of 11/33kv will be increased by 17pc to Rs14.70. RESIDENTIAL: Although power rates for domestic consumers will be increased from October 1, the highest hike of 73pc will be for consumption of more than 200 and 300 units per month – the tariff will go up from Rs8.11 per unit to Rs14. For consumers using less than 200 units the tariff will remain unchanged, but this will require an amendment in rules and hence a delay of two months. For consumers using 301 to 700 units the tariff will be increased by about 30pc to Rs16 per unit from Rs12.33. Those using more than 700 units will face an increase of 20pc to Rs18 per unit from Rs15.07. The rate for peak load exceeding 20kw will increase by 52pc to Rs12.50 per unit from Rs8.22.