Islamabad:
Oil consumers should mainly finance the recent reduction in electricity rates up to 17% in the context of the Prime Minister’s rescue package.
Friday, the National Electric Power Regulatory Authority (NEPRA) held a public hearing to examine the request of the RS1.71 tariff reduction government per unit for Pakistan consumers, including Karachi.
It was informed that the total subsidy had been increased to 266 billion rupees after adding 58.6 billion rupees of oil development (PDL). Currently, the government provides 266 billion rupees of differential pricing to fill the gap between real and wise prices, which could reach 324 billion rupees with the last price proposal.
The government recently increased PDL from RS60 to RS70 per liter on petrol and diesel each, but it has announced that its impact would be redirected to electricity consumers. Now, it is believed that oil consumers will provide 58 billion additional PDL rupees to transmit electricity consumers.
During the hearing, NEPRA ordered the division of the power to eliminate confusion between consumers, in particular the industrial sector.
While hearing a government petition for the price reduction of RS1.71 per unit due to an additional PDL of 58.6 billion rupees for three months, the president of the NEPRA declared that the work was underway to make an announcement by the Prime Minister of a power rate unit of 7.69 rupees per unit for industrial consumers and 7.41 RS per unit for domestic consumers Lifeline users.
He added that consumers would receive immediate relief of 5.03 rupees per unit in the coming days, while remaining respect would be provided in the adjustment of the quarterly rate (QTA) for the third quarter.
The industrialist Aamir Sheikh recognized the reduction in prices but stressed that there was a difference because the president of the NEPRA cited a relief of RS5 per unit while the power division indicated a reduction in RS6.
The ventilation of QTA relief includes RS1.9 per unit under the differential price grant, RS1.71 under QTA and RS1,36 under the adjustment of fuel prices (including RS0,46 and RS0.90 per unit).
“I hope that the Nepra will clarify if the relief of the next QTA will be granted to consumers during the current quarter (April-June), which means two QTA simultaneously, or it will be finalized now but will be implemented during the quarter of July-September,” he said. “If the next QTA is granted in this quarter and is approximately less RS1 per unit, this clarification would allow us to estimate a net relief of approximately RS4 per unit and to plan export sales accordingly,” he added.
Arif Bilwani and Tanveer Barry also asked for clarifications on several points raised during the public hearing.
The proposed decrease in the tariff must be implemented by an increase in the tariff differential subsidy, the government already obtaining approval from the firm before submitting the request to NEPRA. The relief will be applicable to all electricity distribution companies, including K-Electric (KE), for three months. However, officials said that consumers in the lifeline would not benefit from the advantage.
According to officials from the electricity division, the government aims to compensate for the cost by estimated savings of 58 billion rupees while keeping stable oil prices over the next three months.
Additional alleviations are provided by revisions in electricity purchase agreements, as savings of RS12 billion following negotiations with independent electricity producers (IPP) had already been included in the recent QTA. The government is also negotiating with banks to cope with circular debt. These talks are part of a wider strategy to finalize an arrangement that could reduce responsibilities in the energy sector.
The officials said that relief for consumers was provided by quarterly adjustments instead of resuming annual due to current economic conditions.
NEPRA officials confirmed that a relief of RS1,36 per unit had already been granted under the adjustment of fuel costs and with the proposed reduction of RS1.71, consumers could receive immediate cumulative relief from RS5.03 to Rs5.04 per unit. The authority will examine the data submitted and render an official decision.
The officials of the energy division stressed that the continuation of rescue measures would depend on macroeconomic stability, noting that the current financial situation did not allow the annual prices to be included, which is why quarterly adjustments were used. The third quarterly adjustment request should be submitted in the second week of April.
During the hearing, concerns were raised concerning the burden placed on consumers connected to the network due to the increase in net implementation connections, resulting in a RS1.5 price hike per kilowatt (kWh).
In response, NEPRA officials said the government actively deliberate on the issue and soon had to announce a decision. They added that adjustments can also be introduced during the next rebasing price to ensure equity while protecting grid consumers.
RS3.02 Relief for Ke consumers
In addition, the NEPRA rendered its decision on KE’s request for the adjustment of provisional fuel loads for January 2025, indicating a relief from RS3.02 per kWh. This will be sent to consumers in April 2025 Bills.
The NEPRA has temporarily kept 2 billion rupees with regard to adjustments due to the partial load, the open cycle and the degradation curves as well as the start -up costs in accordance with its decision concerning the production rate for the period July 2023 from the adjustments of fuel loads for January 2025.
