- Nepra raises electricity tariff by Rs4.96 per unit for FY24 on IMF’s demand.
- Gas rates also expected to increase by 45-50% as per OGRA’s approval.
- Karachiites to face double jeopardy with monthly fuel charges adjustment and electricity tariff hike.
Nepra Raises Electricity Tariff by Rs4.96 Per Unit on IMF’s Demand
ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) declared on Friday a significant increase of Rs4.96 per unit in the base electricity tariff for FY24, complying with the International Monetary Fund’s (IMF) demand.
Government to Collect Rs3.281 Trillion from Power Consumers
Following this decision, the government is set to collect Rs3.281 trillion from power consumers across all distribution companies.
Gas Prices Also Expected to Rise
In addition to the electricity tariff hike, the government is working on increasing gas rates as the Oil and Gas Regulatory Authority (OGRA) has already approved a 45-50% increase in gas prices on June 2, 2023.
Implementation Begins on July 1
The implementation of the electricity tariff increase will commence on July 1, with the tariff rising to Rs29.78 per unit from the current Rs24.82/unit.
Different Charges for ToU Meter Users
Consumers using the ToU (time of use) meter will now pay up to Rs49.35 per unit. During peak hours from 5 pm to 11 pm, they will pay Rs49.35 per unit, and during out-of-peak hours, the rate will be Rs33.03.
Double Jeopardy for Karachiites
Karachiites face double jeopardy as Nepra increases the monthly fuel charges adjustment for May by Rs1.44 per unit, which will be reflected in their July billing.
Varied Impact on Different Categories
The increase in the base tariff will be passed on to all categories differently, with some facing a lesser increase while others may see an increase of up to Rs6 per unit, depending upon the government’s decision.
Additional Costs to Bear
Apart from the new base tariff of Rs29.78 per unit, consumers will also pay a financing cost surcharge of Rs3.23 per unit from July 1 to generate Rs335 billion to finance the power sector’s debt and liabilities amounting to Rs2.6 trillion. They will also continue to pay the Tariff Rationalization Surcharge of Rs0.47 per unit.
Background Details
The capacity charges payment’s share in the increase of base tariff has risen to 70%, which amounts to 3.472 per unit, while 30% is related to energy price. The new base tariff increase has been calculated at a dollar value of Rs287, inflation at 17%, and electricity generation growth at 7%. The consumers will pay capacity charges in the tariff of Rs1.874 trillion, which was Rs1.251 trillion in 2022-23.
Extra Burden on Consumers
Consumers in Pakistan are feeling the burden of surcharges, duties, and taxes, besides the actual cost of electricity. They are being charged various additional fees like tariff rationalization, financing cost surcharges, electricity duty, PTV license fee, GST, income tax, extra tax, further tax, and sales tax.
IMF’s Requirement
The increase in power tariff was a crucial requirement imposed by the IMF to provide financial assistance to Pakistan. The IMF has consistently urged the government to raise the tariff and eliminate power subsidies as part of efforts to reduce the country’s fiscal deficit.
Nepra’s Perspective
However, Nepra attributes the tariff increase to factors such as low sales growth, rupee devaluation, high inflation, exorbitant interest rates, and the addition of new capacities.
Projected Total Revenue Requirement
The projected total revenue requirement for distribution companies in the fiscal year 2023-24 is estimated to be Rs3.281 trillion, with projected sales of 110,165 GWh.
Last Year’s Tariff Increase
During the previous financial year, the base tariff was increased by Rs7.91 per unit, impacting Rs2.8 trillion, but it was implemented in three stages at intervals.
Published in PakWeb, July 15, 2023.
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