ECC approves Rs133bn for K-Electric, IPPs.

ISLAMABAD -- Undecided whether to pass on to consumers or absorb the Rs90 billion outstanding cost of electricity consumed by Karachi residents five years ago, the Economic Coordination Committee (ECC) of the cabinet on Wednesday approved charging 57 paise per unit recent quarterly adjustments in July, August and September.

Presided over by Finance Minister Miftah Ismail, the ECC also approved a total of Rs177bn supplementary grants, including the payment of Rs37bn to K-Electric for the tariff differential subsidy (TDS) and Rs96bn to 11 independent power producers (IPPs) set up under the 2002 power policy as the second instalment of the committed payments under the 2021 renegotiated agreements.

'The ECC approved tariff rationalisation for K-Electric by way of adjustments of increase Rs0.571 per unit with a recovery period of three months,' said an official announcement. This increase in tariff is on account of quarterly adjustments for July-September 2021.

In addition, the National Electric Power Regulatory Authority (Nepra) was asked to issue a revised schedule of tariff (SOT) for October-December 2021 or incorporate it in the latest schedule of tariff for the Jan-March quarter after incorporating tariff rationalisation.

It may be noted that Nepra has already determined a reduction of 47 paise per unit for January-March 2022 and an increase of Rs1.33 per unit and Rs6.49 per unit for the two quarters of April-June 2021 and October-December 2021, respectively.

The Ministry of Energy's Power Division submitted another summary on the notification of quarterly tariff adjustments (QTAs) of K-Electric from July 2016 to March 2020 and the associated financial impact of Rs90bn. The delays were initially caused by stay orders obtained by KE but the final QTA determinations issued by Nepra could be implemented by the PTI government, which asked Nepra to provide it with a solution.

Nepra expressed its inability, saying it had completed its process of tariff determinations and it was now up to the government under the law to impose a tariff surcharge on consumers to recover the amount or take it over as subsidy. The PTI government remained undecided. Meanwhile, Nepra also came up with determinations for three subsequent quarters - April to December 2022 - with an additional impact of Rs24bn, taking the total outstanding amount to Rs113bn.

In a kind of retaliation, KE stopped payments to the national grid with which its power supply contract expired in...