ISLAMABAD: Despite strong opposition from Karachi-based industrial and political leaders and serious concerns from members of the National Electric Power Regulatory Authority (Nepra) over the detrimental economic impact of rising energy prices, the Power Division on Monday sought staggered application of about Rs10 per unit increase in K-Electric’s applicable tariff.

At a public hearing presided over by Nepra Chairman Waseem Mukhtar, the regulator’s case officers said the three separate quarterly tariff adjustments demanded by the Power Division worked out an increase of Rs8.70 per unit in KE’s average tariff but the cumulative impact rose to Rs11 per unit after taking into account the general sales tax. For industry, the tariff increase, excluding 18pc GST, would be Rs10 per unit.

“This is terrible. How would the consumers absorb this and how would industry survive”, questioned Nepra’s member Tariff representing Balochistan Muthar Niaz Rana who noted that electricity rates for industry without taxes would reach Rs47 per unit from Rs37 at present. He was told that the domestic tariff for those above 700 units would also be increased to Rs52 per unit (excluding taxes, surcharges and various levies) from Rs42 at present.

Member technical from Sindh Rafique A. Shaikh and member Khyber Pakhtunkhwa Maqsood Anwar Khan shared similar concerns that the industry would not be able to meet export orders and lead to greater unemployment which should be a cause of grave concern for all. Mr Rana said this would hamper economic activities and negatively impact recoveries thus leading to a vicious cycle of further tariff increases.

He said the Power Division had been directed to conduct a sensitivity analysis of the tariff policy to see if different consumer categories could pay or if it had already crossed affordability thresholds but deplored no progress on that count.

Nepra’s Member Law from Punjab Amina Ahmed expressed dissatisfaction over the policy guidelines approved by the government on the application of KE’s outstanding quarterly tariff adjustments on par with Discos and lamented that the Power Division had failed to provide legal cover to all past adjustments even though it was twice given a draft of the legal language.

The Power Division officials said they had complied with the Nepra’s written requirement but would get a revised endorsement from the caretaker cabinet if some aspect was still missing.

Business leaders Tanveer Bari and Arif Bilwani and Jamaat-e-Islami leader Hafiz Naeem ur Rehman said it appeared the Power Division had decided to close down the industry because the net impact after including the proposed quarterly adjustments and Rs7.5 per unit increase in base tariff with effect from July went beyond Rs20 after including taxes. They said the government was providing gas and electricity to KE without any agreement and over Rs50bn on account of KE’s claw-back mechanism was not reaching the consumers and demanded the petitions for tariff increases should be rejected.

The Nepra chairman said the proposed tariff adjustments appeared to be detrimental to industry and the economy at large and the government should consider alternate options as well like offering cheaper rates to industry on incremental consumption to offset the impact of massive price shock.

Joint Secretary Power Division Mehfooz Bhatti said the government was sensitive to the situation and was considering options for facilitating industry within the constrained situation of the government.

As a short-term move, he said the applicability of 47 paise and Rs1.52 per unit adjustments should be applied with effect from November when the first adjustment of Rs3.55 per unit would lapse. The power division through its presentation said KE’s tariff was currently lower than Discos and would be slightly higher over the next few months after the backlog was cleared as Discos consumers had already paid these adjustments.

Published in Dawn, September 12th, 2023