ISLAMABAD. National Electric Power Regulatory Authority (Nepra) has approved increase in base tariffs of power Distribution Companies (Discos) and Karachi Electric (KE) up to Rs 0.95 per unit for unprotected domestic consumers in the name of subsidy reforms.

According to the plan, the government will increase Rs.008 per unit for consumers using 1-100 units monthly, Rs 0.18 per unit for 101-200 units, Rs 0.48 per unit for 201-300 units, and Rs 0.95 per unit for consumers using 301-700 units.

Official documents reveal that the government will generate Rs 20 billion by withdrawing a portion of available subsidy of Rs 0.2 billion expected to be recovered from unprotected consumers using 1-100 units per month, Rs 1.1 billion from consumers consuming 101-200 units, Rs 5.5 billion from consumers using up to 201-300 units, Rs 6.4 billion from consumers using 301-400 units, Rs 3.5 billion from consumers using 401-500 units, Rs 2 billion from consumers using 501-600 units and Rs 1.3 billion from consumer consuming 601-700 units.

On January 24, 2022, during the hearing, the representative of the Ministry also submitted that at present around Rs.268 billion is being provided as subsidy to the domestic consumers, which is being picked up by the Government from fiscal space and being shared by the different consumer categories.

The Ministry further stated that at present around Rs.197billion subsidy is being provided to non-protected consumers; however, in order to avoid sudden price shocks to the consumers, the subsidy would be reduced gradually. Similarly, the protected consumers are being provided with a subsidy of around Rs.71 billion.

The Authority observed that although provision of subsidy is the mandate of the Federal Government; however, in light of observations of the Supreme Court Pakistan in Human Rights Case, the Federal Government has to come to Nepra for any revision in the rates to be charged from the consumers. The Authority also observed that although no revision in the Nepra’s already determined rates has been proposed; however, the Ministry has requested for removal of Incremental Block Tariff (IBT), i.e., removal of one previous slab for residential consumers and reduction in subsidy to the end consumers.

Regarding, K-Electric, the MoE requested that the changes be made in the schedule of tariff of K-Electric currently in field. The Ministry also submitted that such changes would be applied from February 1, 2022. K-Electric’s MYT FY 2017-2023 was notified on May 22, 2019 and quarterly adjustments, pursuant to notification of its MYT, have been determined by the Authority till quarter ended March 2020. The quarterly adjustment determined for the quarter “January to March 2020” is applicable for the quarter “April to June 2020. However, if the changes are not reflected in the Schedule of Tariff (SoT) of K-Electric, it would result in differential tariff for K-Electric consumers’ vis-à-vis rest of Pakistan.

According to Nepra, the MoE, in its letter of January 10, 2022 also submitted that tariff for residential consumers of K-Electric in category 1-100 (protected) was proposed to be reduced from 7.74/kwh to 7.67/kWh, i.e., reduction of Rs.0.07/kWh; however, in Annex-E of the Nepra determination of November 05, 2021, the rate is determined as Rs.7.74/kWh. The MoE accordingly requested to reflect the tariff as Rs.7.67/kWh in the Annex-E.

After discussion and keeping in view the letter of MoE of January 10, 2022, the Authority has decided to amend the SoT determined for the quarter “January to March 2020” shall replace the Annex-E attached with the Authority’s earlier decision November 05, 2021, to be applicable from the date mentioned in the notification of the instant decision. The SoTs of K-Electric for the period from April 2020 till the period the instant decision as notified would be issued as per the existing practice.

The story was originally published in Business Recorder on March 11, 2022.