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54 Paisa Power Tariff Hike Allowed To Generate Rs54bn

dfd ISLAMABAD: Conceding that requirements for tariff increase were not in place, the National Electric Power Regulatory Authority (Nepra) on Friday allowed a 54-paisa per unit average increase in electricity tariff for all the distribution companies of ex-Wapda to generate Rs54bn additional revenue.

In its interim determination, the regulator said it took “pragmatic considerations” to allow 33.75 paisa per unit increase in tariff under quarterly adjustment and 19.772 paisa per increase for adjustment of distribution margin on provisional basis and would decide multiple requests of the ministry of energy, central power purchase agency and distribution companies on 93 paisa per unit increase in due course.

This is the first time in Nepra’s 22-year history that tariff increase (19.77 paisa per unit) was allowed within three days after the request was made by the Power Division.

Both the tariff increases would remain applicable for 12 months. The government would now formally notify the revision in tariff allowed by the regulator within days to meet targets set under the IMF programme. The tariff is not applicable to K-Electric. “The authority has determined a uniform rate of Rs.0.3324/kWh for the allowed amount of quarterly adjustment of Rs33.75bn across each category of consumers of ex-Discos, to be recovered in 12 months period, based on projected sales for the2017-18, after excluding lifeline consumers,” the judgement said that had conducted a public hearing on the subject two days ago.

The regulator noted that keeping in view submissions of Ministry of Energy the distribution companies under single year tariff regime would require some time to file their tariff petitions in line with the amended Act.

However, “being cognisant of the financial constraints of the power sector (the Nepra) has decided to allow an increase of Rs14bn, in the already notified tariff, strictly on provisional/interim basis subject to its adjustment once the tariff determinations of the ex-Discos under Single Year Tariff Regime was finalised”.

The regulator also confirmed that three Discos had filed their annual adjustment for fiscal year 2019-20 that had “not been substantiated with the required documentary evidences e.g. details of writeoffs, audited financial statements etc”.

Yet keeping in view the financial constraints of the power sector, and the submission of Ministry of Energy, the regulator has decided to allow the increase of Rs5.772bn in the already notified tariff of these distribution companies, strictly on interim/ provisional basis, subject to its adjustment based on the required information, which is not available at this point in time”.

The regulator also conceded that it was making a departure from its own judgements to allow these tariff increases. It said the regulator “in its uniform tariff determination dated Dec 19, 2018 had categorically held that although the petition filed by the federal government fell short of the legal requirements” but in view of “pragmatic considerations, it would be inequitable and unconscionable for the authority to dismiss the uniform tariff motion on the basis of non exhaustive compliance of the procedural elements thereof.

It also put on record that its directions under previous tariff adjustments had not been complied with by the government or by the power companies. “The authority further issued directions to the federal government” in December 2018 which although “still remain to be complied with.

However, considering that the instant matter was merely an interim/provisional amount being allowed in the already approved uniform tariff by the authority, therefore, without prejudice to the said observations and directions, the amounts have been determined in a uniform manner.

The instant determination shall not in any way operate to modify, alter, rescind or waive of the observations and the directions of the regulator issued in December last year. It said the regulator would issue a new Schedule of Tariff, in its final decision with revised base tariff which would include updated power purchase price references. The final decision of the authority in the matter of proceedings under consideration would be a detailed one, with all the justifications and rational of the authority’s assessments thereof.

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