ISLAMABAD: The unprecedented hike in electricity tariffs continued its upward journey to burden hapless consumers before the Staff-Level Agreement (SLA) with the International Monetary Fund (IMF) for an economic bailout could see the light of the day.

Three days after imposing a Rs3.82 per unit surcharge for March-June of 2022-23, the government on Friday filed a fresh request with the power regulator for the continuation of up to Rs3.23 per unit surcharge for next fiscal year (2023-24) as the regulator issued a series of notifications to charge higher fuel costs from consumers for consumption in January and recovery of up to Rs14.24 per unit fuel costs outstanding since August last year.

Subsidised power tariff

Simultaneously, the National Electric Power Regulatory Authority (Nepra) also issued two separate notifications for the withdrawal of a special fixed tariff of Rs19.99 per unit for all export industries and for discontinuation of special relief of Rs3.60/unit provided to the private agriculture consumers in their current base rate of Rs16.60/unit. Both these facilities for exporters and farmers now stand finished with effect from March 1.

Informed sources said the IMF had wanted to see the formal notifications issued and implemented before signing the SLA.

Nepra notifies end of cheaper energy for export industries

Surprisingly, the Power Division had pushed for only Rs1.43 per unit surcharge for FY24 during a public hearing on March 2 even though the Economic Coordination Committee (ECC) of the Cabinet had already approved up to Rs3.23 per unit additional surcharge for FY24. This was despite the fact that participants had pointed out during the public hearing that Rs1.43 per unit surcharge had become irrelevant after the ECC decisions which had jacked it up to Rs3.23 per unit under insistence from the IMF mission holding back $1.2bn disbursements since October last year.

Therefore, Nepra ‘rubber stamped’ the Power Division’s request for Rs3.82 per unit surcharge with effect from March 1 to June 30 and then its continuation at a reduced rate of Rs1.43 per unit for next fiscal year to generate Rs335bn more funds next year for debt servicing.

On Friday, the regulator said the government now claimed that surcharges approved by the regulator on March 6 are not sufficient to meet the electric services obligations of the government” and hence submitted enhanced rates of surcharge for next year. With such volatile economic estimates, the policymakers at the power and finance divisions and Nepra have to be blamed, rather than the IMF, for a much delayed economic bailout.

Under the Rs335bn financing plan for a new surcharge in the 2023-24 fiscal year, there would be a 43-paisa additional cost per unit to protected consumers, using up to 200 units and agricultural tube-wells. This surcharge would increase to Rs3.23 per unit for all other consumers throughout the next year.

Thus, the average national surcharge would work out at Rs2.63 per unit after taking into account the consumers with less than 200 units and agricultural tube wells. The Power Division said the government was empowered under the Nepra law to “collect surcharges from the consumers for the fulfilment of any financial obligation of the federal government concerning electric power services within the bracket of 10pc of the aggregate revenue requirement of all electricity suppliers”.

This surcharge would be applicable across the country, including K-Electric. Nepra on Friday set March 16 as another date for a public hearing as a formality to increase the surcharge for next year to Rs3.23 from the earlier approved Rs1.43.

Simultaneously, by formally issuing a notification Nepra allowed the ex-Wapda distribution companies (Discos) and K-Electric to recover a deferred fuel cost adjustment (FCA) of up to Rs14.24 per unit from the electricity consumers in eight months from March to October 2023.

The same day, the regulator also notified that ex-Wapda distribution companies (Discos) and K-Electric would charge between 48 paisas and Rs1.71 additional fuel cost, respectively, from their consumers for electricity consumed in January, under the monthly FCA mechanism.

Published in Dawn, March 11th, 2023