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Power tariff may go up by further 12pc

There is still a 12 percent difference in the overall cost of power generation and tariff, being charged presently from consumers, and this gap needs to be plugged on priority to end the circular debt, according to an official assessment.

Sources told this scribe that the assessment was prepared by federal government in a bid to effectively address the issue of circular debt that is snowballing at the staggering rate of about one billion rupees per day.

Despite numerous attempts made by the incumbent federal government, the issue of circular debt has not been resolved permanently. According to an official estimate, this menace is going to create unbearable burden on the federal government if immediate remedial measure was not taken.

Official sources said Ministry of Water and Power had proposed a 12 percent increase in the electricity tariff for ending further augmentation of circular debt. The other option in this regard is to give subsidy for making up difference of cost of electricity and the present tariff.

Sources said this issue has also been discussed at the recently held Energy Summit. They added that Prime Minister Yusuf Raza Gilani and chief ministers including Shahbaz Sharif opposed the move, terming it a burden on the masses. However, sources said, the Ministry of Finance expressed its view on the issue, saying that steps must be taken urgently to bridge the gap between the cost of electricity and its price. We are not saying that tariff increase is the sole solution to the problem, the finance minister was quoted having said at the summit. Instead, he added, step would have to be taken to bridge the gap on sustainable basis.

Sources said federal ministries did not further insist on option of removing difference in the cost of energy and tariff. However, the Ministry of Water and Power is also working on a uniform power tariff for consumers, which would cover the collective revenue requirements of all distribution companies. The aim of such an exercise is to remove subsidy across the board.

Under this approach, policymakers took decision of increasing slab of lifeline consumers from 50 units to 100 units. The next step, sources added, could be increase in tariff for remaining slabs as major chunk of subsidy given in electricity tariff is being enjoyed by ‘undeserving’ consumers. As per present tariff determination, even consumers category of higher slabs are getting subsidy from the government, which is definitely not desirable, sources said.

Nevertheless, sources added, proposed step of further increasing electricity tariff on uniform basis would put extra burden on the consumers who are paying their dues regularly and there are minimal distribution losses in their respective discos. They stressed the need to impose comparatively high tariff on those distribution companies which have registered high losses and less recovery.

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