By Aftab Maken
ISLAMABAD: The PPP government, in line with the conditionality of the IMF and the World Bank, is all set to increase 2-3 per cent power tariff monthly with minimum power increase of 19.4 per cent and maximum of 30.4 per cent at the end of June 2011, says an official document of the Ministry of Water & Power available with The News.
All the monthly fuel adjustments, not notified as yet, will be notified immediately possibly on Nov 05 after determining the power tariff before Oct 30, 2010, it added. The document further suggests that the two possible scenarios for increasing power tariff of 2-3 per cent respectively per month with minimum increase of 19.4 per cent and maximum of 30.4 per cent respectively would help the government to eliminate the power subsidies.
Current power tariff is Rs7.09 per k Wh and with this proposed increase the power tariff will be Rs8.49 per k Wh and Rs9.24 per k Wh respectively in the remaining nine months of the current fiscal year, said the document.
The PPP government has so far increased 63.6 per cent power tariff during the last 30 months and with this proposed increase the power tariff in next 39 months will register an increase of 94 per cent at the end of this fiscal year.
However, if the proposed power reforms were not implemented, the document further pinpointed that the government needs at least Rs226 billion per month to gap the power subsidies. The government has only budgeted subsidy of Rs30 billion for 2010-11.
To overcome the power subsidies, the document also recommends that the final gap of Rs226 billion can be plugged through a number of measures that include Pepco measures, ministry of Water & Power notification and slab restructuring.
Monthly increase of two percent starting from Oct 1 will generate Rs42 billion while three percent increase will also generate revenue of Rs64 billion to gap the actual cost of the power generation, said the document.
An amount of Rs531.4 billion would be collected if the power tariff of July 2010 is persuaded whereas with the proposed increase the power tariff would be Rs573.3 billion and Rs596.1 billion respectively against the actual power cost of Rs694 billion, it added.
The initial power gap of Rs120 billion can reduce the revenue deficit by the introduction of reforms in Pepco, notification and slab restructuring and the final gap in the first scenario would be with a deficit of Rs8 billion while in the second scenario, it would be surplus of Rs15.4 billion, the document concludes.
