ECC okays Rs13 per unit raise in power tariff.

ISLAMABAD -- With two major fuel suppliers in dire need of liquidity to the tune of Rs2 trillion in three months, the government has started passing on the increase in electricity tariff by an average Rs13 per unit in quick instalments to win over an urgently needed bailout package from the International Monetary Fund (IMF).

Highly placed sources told Dawn that power distribution companies (Discos) have already been communicated directives to withdraw with effect from June 8 a subsidy of about Rs5 per unit introduced by former premier Imran Khan on Feb 28.

This will become part of the current month's consumer bills that will also include an additional fuel cost adjustment of Rs4 per unit.

This will be followed by two equal instalments of Rs3.50 per unit each. These will become effective in July and August billing cycles, followed by the remaining Rs1 per unit adjustment later. This will clear the power-sector conditions of the IMF and help revive its programme suspended since February last year.

The Economic CoordinaAtion Committee (ECC) of the cabinet, which met on Monday, approved the tariff rationalisation plan for the power sector as per determinations issued by the National Electric Power Regulatory Authority (Nepra) a few days back for increasing the base national power tariff by Rs7.91 per unit with an additional fiscal impact of Rs893 billion in 2022-23.

The meeting presided over by Finance Minister Miftah Ismail was requested by the Power Division to 'pass on Rs7.91 per unit to consumers from July 1'. The targeted tariff differential subsidy (TDS) or cross-subsidy and tariff rationalisation for incorporation in the uniform national tariff was estimated at Rs184bn for Discos because the government has to protect consumers of the first 200 units per month. The Power Division also requested the application of the same rate to K-Electric Ltd to 'maintain uniform tariff across the country'.

As an alternative, the Power Division suggested an increase of Rs6.25 per unit from July 1 and the remaining Rs1.66 per unit from October 1. But this was to result in the TDS of Rs231bn for Discos. The ECC, however, decided in line with the requirement of the IMF programme to increase the tariff by Rs3.50 per unit from July, followed by another Rs3.50 a unit hike in August and Rs1 a unit rise on October 1 - an increase applicable to KE as well. Top sources said this plan will immediately be cleared by the federal cabinet on Tuesday.

An official...