15pc hike in power tariff announced.

ISLAMABAD -- Federal Energy Minister Omar Ayub Khan on Thursday announced an increase of Rs1.95 per unit (15 per cent) in electricity tariff for all consumers in the country to generate about Rs200 billion.

At a joint news conference with Planning Minister Asad Umar and Special Assistant to the Prime Minister on Power Tabish Gauhar, the energy minister said tariff increase was being made despite tough economic conditions due to compulsions arising out of the 'landmines' left behind by the previous government with ill intentions.

He said the government was taking a series of measures to control 'compulsory payments' and acting as a 'shield' otherwise tariff increase would have been around Rs8-9 per unit. He said the decision for tariff increase had been sent to the regulator to issue a schedule of tariff notification.

Under the decision, it will be the first time in almost two decades that base tariff for lifeline consumers using up to 50 units per month would be increased.

Mr Gauhar said it would not be a big thing if Rs2 per unit for this category went beyond Rs2.50.

He said negotiations had been started with sponsors of upcoming power projects of 10,000MW capacity to stagger their completion timelines to create a breathing space for power consumption and payments.

He said the PML-N government did not pass on prior years' adjustments in tariff worth Rs227bn that should have been recovered by 2019. This required the PTI's government to increase average base tariff by Rs2.61 per unit but Prime Minister Imran Khan decided against putting such a huge burden on the consumers at the outset. Therefore, the government increased tariff by only 23 paisa per unit at that time and had to absorb Rs2.38 per unit as subsidy amounting to Rs247bn.

Mr Omar said last year the government provided Rs473bn subsidy to the power sector despite economic crunch and Covid-19 to protect the consumers.

He said the PTI government had inherited an unsustainable level of capacity payments from the PML-N government. The agreements inked by the previous government in the power sector were based on bad intentions and corrupt practices, he said adding that due to these agreements, the increase in electricity tariff in one year alone (2019-2020) on account of compulsory capacity payments would have been Rs2.18 per unit but the government decided to increase the rates by Rs1.95 per unit only in 2021.

He said the annual capacity payments to independent power projects (IPPs)...