ISLAMABAD: Amid engagements with the International Monetary Fund (IMF) for the revival of its $6 billion programme, the government on Wednesday decided to ask the National Electric Power Regulatory Authority (Nepra) to add the impact of Rs2.27 per unit pending fuel cost adjustments (FCAs) to the base tariff already being increased by an average Rs1.39 per unit with effect from Nov 1.

A decision to this effect was taken at a meeting of the Economic Coordination Committee (ECC) of the Cabinet presided over by Minister for Economic Affairs Omar Ayub Khan. Just before the ECC meeting, Adviser to the Prime Minister on Finance Shaukat Tarin presided over the meeting of Technical Advisory Committee (TAC) of the ECC to clear all the decisions which were later stamped by the ECC given the legal complications.

“The ECC, after due deliberation, recommended that the federal government may issue guidelines to Nepra and also require it to reconsider its decision dated August 7, 2020 to allow recovery of pending FCA as prior year adjustment in rebasing decision which are under process at Nepra,” said an official announcement.

During the course of recent talks, the IMF had projected a tariff increase of Rs1.50 to Rs2.50 per unit during the current fiscal year.

Under the tariff rebasing exercise, the Power Division has already asked the Nepra for immediate notification of Rs1.68 per unit increase in base tariff for all domestic consumers across the country, except those under 200 unit of monthly consumption besides Rs1.39 per unit increase for all other consumer categories including commercial, general services, agricultural tubewells and residential consumers.

After accounting for 200 units exempted from tariff increase, the average tariff increase works out at Rs1.39 for which the Nepra has already completed the public hearing process early this week. The Power Division had told the Nepra that rebasing of tariff with Rs1.39 per unit increase would generate Rs168bn additional funds to the power companies or reduce subsidy otherwise to be paid out of budget during current fiscal year. Power Division official said the revision would increase the average base power tariff from Rs13.97 per unit at present to Rs15.36 per unit after notification.

However, a summary of Power Division seen by Dawn said the pending FCAs for November 2019 to June 2020 (eight months) would have a financial impact of Rs17bn on consumers. This would now be added to Rs168bn under tariff basing, apparently taking total impact to Rs185bn. When spread over full year, the average tariff is estimated to go up by about Rs1.85 per unit.

In its August 7, 2020 decision, Nepra had clubbed FCAs for eight months — five increases and three reductions — for passing on to consumers in two months of August and September 2020 at the rate of Rs1.1 per unit and Rs1.17 per unit increase, respectively. However, the government decided at the time to withhold its implementation.

This was despite the warnings by the power regulator that such variations need to be passed on to the consumers in timely manner in order to ensure financial viability of the distribution companies which otherwise would result in piling up of the legitimate costs and sudden impact on consumers and may impact their financial viability.

The ECC recommended to the cabinet to approve a summary regarding late payment surcharge of operations of fertiliser plants at the Sui Northern Gas Pipelines Ltd (SNGPL) network between September, 2018 to November, 2019 with a direction to seek prior approval from the Board of SNGPL.

The Ministry of National Food Security & Research presented a summary before the committee to reshuffle the chairmanship of the committee constituted for accepting/scrapping the tenders floated by TCP to import wheat and sugar. The ECC recommended that Mr Tarin, instead of Minister for National Food Security & Research Syed Fakhar Imam, may head the aforesaid committee for taking operational decisions related to tenders for import of wheat and sugar floated by the Trading Corporation of Pakistan.

The ECC also approved a Petroleum Division summary regarding extension and rehabilitation of gas network in oil and gas producing districts of Khyber Pakhtunkhwa to reduce gas losses in collaboration with the provincial government through provision of legal connections to nearby villages.

Published in Dawn, November 5th, 2021