ISLAMABAD, Sept 10: The federal government on Wednesday increased power tariff for all consumers of the Karachi Electric Supply Corporation KESC by an across-the-board seven paisa per unit with immediate effect, a senior government official said.

The decision came after a meeting presided over by Prime Minister Mir Zafarullah Khan Jamali.

The meeting also decided that the government would provide a seven paisa per unit subsidy to the KESC to cover the remaining gap between the power utility’s cost and income.

The official said the tariff increase would come into force on Sept 10.

The increase has been made under the quarterly automatic fuel adjustment formula.

The sources said the government was reluctant to pass on the full impact of 14 paisa per unit increase to KESC consumers as determined by the National Electric Power Regulatory Authority (Nepra) on July 23.

However, the visiting IMF mission and the World Bank had expressed serious concern that impact of fuel prices was not being practically treated as a pass-through item which was a clear deviation from the agreed programme.

The official said the IMF mission was assured by the finance minister that a notification to increase KESC tariff would be issued before the conclusion of 6th and 7th review.

When contacted, Water and Power Additional Secretary Riaz Ahmad Khan confirmed that power rates for the KESC would be increased by seven paisa per unit while remaining seven paisas per unit would be absorbed by the federal government as subsidy.

He said that seven paisa per unit tariff increase would be applicable to all consumer categories, including domestic, industrial and commercial. He was not clear how much amount would be required to absorb seven paisa per unit subsidy.

Nepra had allowed three paisa per unit increase for Wapda and 14 paisa per unit increase for KESC on July 22 and 23, respectively. The Nepra determination on Wapda tariff was implemented on August 19.

The IMF mission had pointed out during recent meetings that the government was once again deviating from an undertaking given during the 5th review that fuel adjustment would be a completely pass-through item.