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Power rates for industries to go over Rs17 per unit

Top government and energy decision-makers on Monday put their heads together to discuss the electricity tariff rationalisation plans based on multiple options but rates for industries were almost sure to jump over Rs17 per unit.

The discussions are to be finalised and a report presented to Prime Minister Mian Nawaz Sharif, who is to announce it in the energy policy sometime next week after holding the moot of all heads of parliamentary parties on national security.

Chaired by Finance Minister Senator Ishaq Dar, the energy committee meeting attended by Ahsan Iqbal, Federal Minister for Planning and Development, Dr. Musadak Malik, Special Assistant to the Prime Minister, Shaukat Fayyaz Tareen, and senior officials of the Ministries of Water and Power and Finance worked out the definition of power consumers who deserve subsidised tariff and decided to model the various options on tariff rationalisation under which the burden of subsidy would be passed on to commercial, industrial and bulk consumers, one of the participants of the meeting told The News.participant of the meeting confided to The News.

Under the tariff rationalization plan, he said, the tariff will be increased for industrial, commercial and bulk consumers in the current month of July in such a way that they should not go for alternate sources to generate electricity on their own.

“The brainy members of the committee want the said categories of the consumers to utilize the electricity with raised tariff but acceptable to them to refrain them from not exploring alternate sources to generate electric power.”

In case they, he argued, start generating electricity on their own, then the government would suffer the loss most in terms of revenue.The domestic consumers use 46 percent of the total subsidy, industrial consumers 29 percent, agriculture 12 percent, commercial consumers 7 percent and AJK and bulk consumers’ 3 percent each.

Every month the circular debt increases by Rs50-60 billion and for the current financial year the circular debt is projected at Rs430 billion if the electricity units are produced as generated in the last financial year. In case the generation is increased then circular debt may cross the Rs500 billion marks. “So the implementation of tariff rationalization plan is inevitable.”

Under the plan, the power tariff is estimated to hike up to over Rs17 per unit from existing Rs9-12 per unit for industrial consumers and the raised tariff will vary for commercial consumers with minimum raise to Rs14-15 per unit and maximum raise to Rs15-16 per unit from existing tariff of almost Rs12.30 per unit.

Likewise the tariff for bulk consumers is estimated to increase by Rs4-5 per unit.The tariff rationalization for domestic sector would be implemented somewhere in the month of October. The experts had earlier worked out the consumers who utilize 300 units in a month will be exempted from the raise in tariff, but in the meeting, it was assessed that the huge subsidy of 84 percent is eaten up by the category of the consumers fall under the slab of 0-300 units.

In the meeting it was also mentioned that the consumers who consume electricity units up to 300 in a month also use the ACs off and on and those who use ACs does not deserve subsidized tariff.

The committee has shown its inclination that the consumers who use 200 units should be not affected with the raise in power tariff. However, the power tariff for 300 unit consumer would be increased to some extent by almost Rs1 per unit.

However, tariff will increase by Rs2-4 for consumers from above 300 units to over 1000 units. The Nepra had determined the tariff at Rs14.67 per unit whereas the notified tariff stands at Rs8.87 per unit owing to which the huge tariff subsidy of over Rs350 billion was extended in last year and this time out of which the government will extend some subsidy to the consumers and the burden of the remaining subsidy will be passed in the industrial, commercial and bulk consumers.

However, the press release issued by the Finance Minister about the energy committee meeting did not mention even a single word about the tariff rationalization plan.

It just says that as instructed by Prime Minister Mian Mohammad Nawaz Sharif, a meeting of the Energy Committee was convened under the chairmanship of Finance Minister Senator Ishaq Dar at the Finance Minister’s Office here on Monday, to review the arrangements made to implement his directions to ensure that no load-management is undertaken during the month of Ramazan during Sehar, Iftar and Taraweeh.

The meeting was informed that uninterrupted supply of electricity would be ensured throughout the country during Ramazan from 0230 hours to 430 hours (Sehar), 1830 hours to 2000 hours (Iftar) and 2100 hours to 2230 hours for (Taraweeh). In this connection a comprehensive plan chalked out by the Ministry of Water and Power for its implementation was provided to the members of the Energy Committee.

The Secretary Water and Power Anwar Ahmad Khan informed the meeting that extensive meetings have been held with power companies to ensure that the implementation of instructions of the prime minister are carried out in letter and spirit.

Senator Ishaq Dar also informed the meeting that the Executive Committee of National Economic Council (ECNEC) in its meeting held on Thursday, July 4 2013 approved four power projects having a total generation capacity of 3511 MW. These include two nuclear energy projects in Karachi, Nandipur Combined Cycle Project in Punjab and Neelum Jhelum Hydropower Project in Azad Jammu and Kashmir.

The Finance Minister expressed the hope that with the completion of these projects not only a sizeable addition of 3511MW would be made in the national grid but these would also produce affordable and cheaper electricity.

The Finance Minister directed that these projects should now be reflected in the projections made by the Ministry of Water and Power which should monitor its progress.

The Finance Minister said that the government had taken a bold decision and already cleared circular debt of Rs322 billion to settle outstanding dues of the private power producers. The Ministry of Water and Power should now vigorously pursue the private producers to provide additional 1700MW in the national grid as promised by them, so that a visible relief can be felt by the common man, he emphasized.

The Energy Committee also reviewed the overall supply and demand position in the country and directed the Ministry of Water and Power to address operational inefficiencies on war footings.

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