Government wants impact of pending FCAs added to base rate – Journal

ISLAMABAD: Amid commitments with the International Monetary Fund (IMF) to relaunch its $ 6 billion program, the government decided on Wednesday to ask the National Electricity Regulatory Authority (Nepra) to add the impact of 2.27 rupees per unit pending the cost of fuel. the adjustments (FCA) of the base tariff are already increased by an average of Rs 1.39 per unit as of November 1.

A decision in this direction was taken at a meeting of the Cabinet’s Economic Coordination Committee (ECC) chaired by Minister of Economic Affairs Omar Ayub Khan. Just before the ECC meeting, advisor to the Prime Minister of Finance Shaukat Tarin chaired the ECC Technical Advisory Committee (TAC) meeting to clear all decisions which were subsequently stamped by the ECC given the legal complications.

“The ECC, after deliberation, recommended that the federal government be able to issue directions to Nepra and also ask it to reconsider its August 7, 2020 decision to allow the pending FCA recovery as an adjustment to the previous year in the relining decision which is pending at Nepra. “said an official announcement.

During recent discussions, the IMF had forecast a tariff increase from 1.50 rupees to 2.50 rupees per unit in the current fiscal year.

As part of the tariff rebasing exercise, the electricity division has already asked Nepra for immediate notification of the Rs 1.68 per unit increase in the base tariff for all domestic consumers across the country, except those with less than 200 monthly consumption units in addition to Rs 1.39 per unit increase. for all other categories of consumers, including commercial services, general services, agricultural tube wells and residential consumers.

After counting 200 units exempt from tariff increases, the average tariff increase amounts to Rs 1.39 for which the Nepra has already completed the public hearing process at the beginning of this week. The power division had told Nepra that rebasing tariffs with an increase of Rs 1.39 per unit would generate additional funds of Rs 168 billion for power companies or reduce subsidies that would otherwise be paid off-budget. during the current fiscal year. The head of the Power division said the revision would increase the average basic electricity tariff from Rs 13.97 per unit currently to Rs 15.36 per unit after notification.

However, a summary of the Power division seen by Dawn said that the pending FCAs from November 2019 to June 2020 (eight months) would have a financial impact of Rs 17 billion on consumers. This would now be added to Rs168bn below the rate base, apparently bringing the total impact to Rs185bn. Spread over the whole year, the average price is expected to increase by around Rs 1.85 per unit.

In its decision of August 7, 2020, Nepra had bludgeoned the FCAs for eight months – five increases and three reductions – to pass them on to consumers in two months of August and September 2020 at the rate of Rs 1.1 per unit and Rs 1.17 per unit. increase, respectively. However, the government decided at the time to suspend its implementation.

This despite warnings from the electricity regulator that such variations must be passed on to consumers in a timely manner in order to ensure the financial viability of distribution companies, which would otherwise lead to legitimate cost accumulation and a sudden impact on consumers. consumers and may affect their financial viability.

The ECC recommended that cabinet approve a summary regarding the late payment surcharge for fertilizer plant operations on the Sui Northern Gas Pipelines Ltd (SNGPL) network between September 2018 and November 2019, with instructions to request the prior approval of the Board of Directors of SNGPL. .

The Ministry of National Food Security and Research presented a summary to the committee to reshuffle the chairmanship of the committee formed to accept / cancel the tenders launched by TCP for the import of wheat and sugar. The ECC recommended that Mr. Tarin, instead of Minister of National Food Security and Research Syed Fakhar Imam, could lead the aforementioned committee to make operational decisions related to tenders for the import of wheat and of sugar launched by the Trading Corporation of Pakistan.

The ECC also approved a summary from the Petroleum Division regarding the expansion and rehabilitation of the gas network in the oil and gas production districts of Khyber Pakhtunkhwa to reduce gas losses in collaboration with the provincial government. through the provision of legal connections to neighboring villages.

Posted in Dawn, le 5 November 2021

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