Ministry of Water and Power on Friday imposed a 60 paisa per unit additional surcharge on electricity as per an agreement with the International Monetary Fund (IMF) despite a stay by Lahore High Court (LHC) on all electricity surcharges.
Pakistani authorities told the IMF in November that a 60 paisa per unit increase in tariff through an additional surcharge across the board except lifeline consumers using upto 50 units in a month will constitute a four per cent increase in the weighted average tariffs on electricity consumers’ electricity consumption.
National Electric Power Regulatory Authority (Nepra) has slashed power tariff by Rs 2.97 per unit for November under monthly fuel price adjustment but the government decided to pass on only Rs 2.37 per unit to the consumers.
An official told Business Recorder that since the government cannot slash Nepra’s determined tariff, so it took a policy decision to impose a 60 paisa per unit additional surcharge.
According to the IMF’s fourth and fifth reviews under the extended arrangement and request for a waiver of nonobservance of performance criteria, Pakistani authorities informed the IMF Staff Mission that on January 1, 2015 an additional surcharge of 60 paisa per unit will be levied to increase weighted average tariffs by 4 percent.
The current effective notified tariff is Rs 11.82/kWh. This will be adjusted subject to negative Fuel Price Adjustments (FPA) to maintain the consumer prices constant.
For instance in November 2014, an estimated reduction in FPA was 61 paisa per unit, whereas 63 paisa per unit will be in December, 42 paisa per unit in January and 21 paisa per unit in February 2005. The notified tariff was Rs 11.82 in November 2014 which will increase to Rs 12.43 per unit.
Syndicated Term Credit Finance (STCF) Surcharge “Debt Servicing Surcharge” of 30 paisa per unit is included in the electricity tariff (excluding lifeline consumers, 0-50kWh) to service debt incurred by Power Sector Holding Company Limited. The company has to service Rs 8.611 billion STCF in the first quarter, Rs 6.247 billion in the second quarter, Rs 7.840 billion in the third quarter and Rs 5.413 billion in the fourth quarter of the current fiscal year, totalling Rs 28.111 billion.
STFC Surcharge on 68000 GWh has been calculated at Rs 28,111 billion which is equal to 41 paisa per unit.
If 30 paisa is excluded from 41 paisa per unit, the balance will be 11 paisa per unit which will be part of January 1, 2015 increase in the “debt servicing surcharge.”
Calculations are based on projected collections with FY2013-14 base case losses (18.6 percent) and collection rate (89.1 percent).
The STCF surcharge will be adjusted upward or downward depending on the timing of tariff notification to ensure that the annual STCF debt service will be fully financed within the fiscal year. Any deficit amount will be borne by the government whereas excess amount will be held by PHPL and utilised for debt service. In both cases, the excess or deficit will be remedied as a prior year adjustment in the next notification. Overdue payables (over 45 days) stand at Rs 196 billion as of end-September 2014.
SOURCE: RECORDER REPORT