Power tariff hikes.

THE decision by Nepra, the power-sector regulator, to apply yet another hike in the price of power is a reminder that the pricing regime in the power sector is in dire need of reform, and more importantly, the right kind of reform. The wrong kind of reform would simply allow all accumulated costs of the inefficiency and lack of competence witnessed in public-sector power distribution companies to simply be passed on to the consumers through some sort of automatic price adjustment. The right kind of reform would structure the incentives for all operators in the power sector - from generators to distribution companies - to compete for the best kind of energy and serve up some top-notch products to their customers. At the moment, what we have is a system where the power tariff is notified by the government and the fuel cost is allowed to be passed through directly by Nepra.

In the most recent case, Nepra has allowed an increase of Rs1.56 per unit through the fuel cost adjustment only for the month of October. So far, this is fairly standard fare, though there is no doubt that the impact on people's bills will be substantial. It is standard fare because the fuel cost is, in the parlance of the power sector, a 'pass through item', meaning it...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT