7 per cent raise in power tariff proposed to Nepra

LAHORE-All the eight electricity distribution companies (DISCOs) of Pakistan Electric Power Company (PEPCO) have submitted for 7 per cent increase in the power tariff.

The DISCOs are seeking to increase tariff, believing that the 10 per cent increase was not enough as of now after the steep increase in the fuel prices to meet the financial shortfall, the Ministry of Water and Power sources said.

They said that the Federal govt allowed DISCOs to raise power tariff by 10 per cent on February 24 against the demand of 33 per cent increase, which was applicable for all except the lifeline consumers.

The sources said that the companies accepted the notified tariff but decided to file review petitions to seek additional raise. The decision of the Authority in the consumer-end tariff for the DISCOs also supported the distribution companies to file review petition later.

The sources said that the furnace oil and gas prices have increased by 54 per cent besides a substantial increase in electricity demand particularly by the middle income consumers due to liberal bank loans and rural electrification. However, the consumers are paying much more as compared to the cost of service being provided to them.

The National Electric Regulatory Authority (NEPRA) sources confirmed that the authority did receive the DISCOs review petitions, however, NEPRA officials showed their ignorance. They said that NEPRA had worked out DISCOs tariff on the basis of O&M costs (indigenous and foreign) and return on equity.

The Authority determined in March last year in respect of biannual adjustment in power purchase price for the distribution companies, adjusting the consumer end tariff 'subsequent to change power purchase price of  the 1st half of  fiscal year 2007-2008'.

The sources said that PEPCO still is facing Rs 38 billion cash shortfall and finding it hard to make payment to the Independent Power Producers (IPPs) from whom it purchases power.

The NEPRA determined the tariff in the light of the World Bank's proposed differential tariff formula.

However, the govt would extend subsidy of Rs 21-22 billion irrespective of the fact whether the consumers reside in the jurisdiction of financially weak DISCO like Hyderabad Electric Supply Company (HESCO) or financially healthy Islamabad Electric Supply Company (IESCO).

The sources said that the NEPRA had determined differential tariff for all the DISCOs but the govt approved Rs 22 billion subsidy to keep it comparable for consumers.

They said that the Ministry of Water and Power had provided the notifications of new tariff to the World Bank but did not give any detailed reaction of the bank.