ISLAMABAD: Energy Minister Omar Ayub Khan on Thursday said the government had increased power tariff by 83-paisa per unit to generate about Rs80 billion in additional revenue for power companies, but blamed the previous Pakistan Muslim League-Nawaz government for the hike.

Speaking at a news conference, the minister said the increase in tariff was the result of “one of the landmines the PML-N had left behind for the Pakistan Tehreek-i-Insaf government as well as people to suffer”. He said the incumbent government had no role in the tariff hike but was compelled to do so.

He said the National Electric Power Regulatory Authority (Nepra) had determined the cost of capacity payments of Rs226bn to be passed on to consumers, but the PML government had held back its notification so that it may not spoil the party’s hope of winning last year’s general election.

Omar Ayub says PTI government will increase renewable energy generation to 8,000MW in five years

Mr Khan said the PTI government had to take difficult decisions in view of the “PML-N landmines” in the shape of holding back notifications and signing expensive electricity agreements. He said both the Pakistan Peoples Party and PML-N had contracted expensive energy projects when they were in power and its costs were now being paid by the consumers.

The minister said the tariff increase would have been even higher by another Re1 per unit had the power division and power companies not collected additional revenue of Rs121bn over the last eight months. He said the build-up of circular debt at a rate of Rs38bn per month during last days of the PML-N government had been reduced to Rs35bn in three months. Of this, he added, about Rs84bn had been recovered through administrative efforts to control theft and improve efficiencies, while the remaining Rs37bn through tariff increase.

Mr Khan conceded that Nepra had worked out 53-paisa per unit average increase for all consumers but the tariff was increased to 83-paisa for all but those consuming less than 300 units per month under instructions of the prime minister to protect the poor.

In reply to a question about the Nepra chairman’s statement that the regulator was asked at the highest level to allow tariff increase in view of the government’s commitments with the International Monetary Fund, the minister said the government did not put any pressure on the Nepra chairman and its members. He said the government believed in transparency and was operating under the existing laws, rules and regulations.

He said that with the recent price hike the government would collect Rs80bn of which Rs25bn would be spent on system upgrade and Rs55bn on payment of circular debt. He refused to reply to a question as to why the government was not issuing sovereign guarantees causing delay in launch of Rs200bn Sukuk bonds by local commercial banks for payment of power sector debt.

Mr Khan also parried questions about under what legal cover the government was raising Rs80bn in revenue for power companies when the regulator had allowed Rs53bn. He, however, said the Economic Coordination Committee of the cabinet had approved additional 30-paisa per unit increase to 83-paisa for all consumers to shift the burden from those using below 300 units.

He said the government was trying to reduce power rates through various measures and the result would be visible in coming days and months. The government had started crackdown on electricity theft, trying to control circular debt and working on adding cheaper renewable energy to the system, he added.

The minister said the government was taking steps to introduce new renewable energy projects in the country which would help in reducing electricity prices. He said the government would increase renewable energy generation from 1,400MW at present to 8,000MW in five years and to 18,000MW by 2030.

He said the total power generation capacity would increase to 42,000MW by 2023 and further to 55,000MW by 2030. He said Saudi Arabia was planning to invest $4bn in Balochistan to produce about 500MW renewable energy. Also, foreign ambassadors based in Islamabad were making queues to seek investment opportunities in Pakistan as the government moved quickly on ease of doing business, claimed.

Published in Dawn, October 4th, 2019