ISLAMABAD: Succumbing to the countrywide protests against the multi-fold increase in electricity tariff, the government has decided to make what is being described as a strategic retreat.

It announced in the Supreme Court on Friday that it was withdrawing the Sept 30 notification about the increase in the power rate for domestic consumers.

“In these circumstances, the federal government withdraws the notification of September 30,” Attorney General Muneer A. Malik informed a three-judge bench headed by Chief Justice Iftikhar Muhammad Chaudhry which had taken up a case relating to loadshedding.

After the withdrawal the notification becomes infructuous and the old electricity tariff is revived for the time being.

The government will now file a petition in the National Electric Power Regulatory Authority (Nepra) to reconsider the determination of tariff of distribution companies (Discos) as well as the Karachi Electric Supply Company (KESC) for the financial year 2012-13. The process will take two to three weeks.

But the government made it clear that the determination would be effective from Oct 1 and would include Rs150 billion subsidies for the power sector to maintain the rates for different slabs as per the guidelines issued by the government.

“The over-billing, if any, in case of re-determination of tariff will be adjusted in future billings,” the attorney general explained.

He made the statement after consulting Water and Power Minister Khawaja Asif who himself appeared before the bench and said the government had a reasonable expectation about availability in the system of 780 billion cubic feet of gas per year through the Iran-Pakistan pipelines project by late next year. Everything in the power and petroleum sectors would be rationalised within this month, the minister said.

And to keep the prices of electricity at the lower side, he said, the government was working on a plan to convert some power plants, including independent power plants (IPPs) and public sector generation companies (Gencos) being run on residual fuel oil (RFO), commonly known as furnace oil, or on diesel, into coal — a much cheaper mode of power generation — in one and a half years.

Khawaja Asif said India generated 70 per cent of its electricity through coal and China 60pc, adding that the Turkish government had offered to install power plants in Pakistan at the mouth of coal mines.

The court suggested that instead of independent power plants which mainly ran on RFO, the government should rely more on hydel sources and divert more gas to the power sector from the fertiliser sector whose finished product was usually smuggled to Iran and Afghanistan, forcing Pakistani peasants to buy fertiliser at higher prices.

The court regretted that the All Pakistan Flour Mills Association was meeting on Monday to consider increasing the price of flour only because of increase in prices of petroleum products and fertiliser.

Khawaja Asif admitted that the fertiliser sector was enjoying a massive concession under a government policy being followed for many years.

Nepra Chairman Khawaja Naeem said the cost of electricity production would reduce by 25 to 35pc if gas was diverted to the power sector, but feared that the midway withdrawal of the Sept 30 notification would put Discos in a quandary. He requested the court to order the government to provide 100pc gas to power plants.

The installed capacity of gas plants in Pakistan is 4,730MW and that of hydel plants 6,900MW. At present only 276mmcf of gas is being provided to gas power plants, which comes to 10pc of the total gas distributed among different sectors; IPPs get 9pc and captive power plants 12pc.

Justice Jawwad S. Khawaja, a member of the bench, regretted that the present government’s energy policy did not contain a word about recovering Rs441 billion dues outstanding against different consumers. “It is a reverse sort of Robin Hood where poor are robbed for the benefit of rich,” he said.

Khawaja Asif said water reservoirs would deplete in a month to a point where total production of hydel generation would come down to a mere 1,000MW whereas the demand of gas by domestic consumers would reach a maximum peak between November and February. The Nepra chief informed the court that total line losses claimed by generation companies at the national level were 19.8 per cent. The Hyderabad Electricity Supply Company estimates the loss at 27pc which rises to 50pc if the theft factor is added. The line losses of Peshawar Electric Supply Company stand at 38pc, Multan Electric Power Supply Company at 18pc and Islamabad Electric Supply Company at 9pc which is close to the international standard.

“Even half of the receivables of Rs441 billion are available, it can be used to replace and improve the already overloaded and deteriorated equipment,” Mr Naeem said.