ISLAMABAD: The proposed amendment to the National Electric Power Regulatory Authority (Nepra) will lead to monthly adjustments in consumer-end electricity tariff which will stand automatically implemented soon after the determination by the regulator.
At present Nepra determines the base electricity tariff on a quarterly basis for distribution companies and then sends it to the federal government for notification after taking into account the element of subsidy on politico-economic considerations.
Simultaneously, the impact of fuel price variation is directly passed on to the consumer under fuel adjustment mechanism in accordance with an earlier change in the Nepra law through the finance bill.
Under the Nepra Amendment Act to be introduced by November this year, the tariff determined by Nepra regulator will be immediately passed on to the consumer. Under the new arrangement, tariff will be revised every month on the basis of fuel prices and accounting for inflation, operational and energy costs.
Planning Commission’s Deputy Chairman Dr Nadeemul Haque told journalists on Tuesday after a two-day closed-door conference on power sector reforms that Nepra would be empowered to notify electricity tariff on a monthly basis under the reforms programme. He said the government would not have the chance to raise power tariff on the basis of cost of service.
He did not explain but apparently implied that tariff would be increased after amendments to the Nepra act and till such time the government would focus on improving efficiency to reduce system losses.
A Nepra official told Dawn that on the basis of Nepra determination, the existing tariff would increase by more than 35 per cent. He said the tariff for distribution companies would range between Rs9.15 and Rs12.59 per unit for Islamabad and Peshawar against the existing applicable average tariff of Rs6.68 per unit.
Power companies have been asked to revise their business plans in line with targets set in the power sector reforms before the next conference to be held in a month. The power companies agreed to take measures for reducing losses and improving efficiency on an urgent basis. The measures include introduction of smart meters in a phased manner and revamp generation capacities to the acceptable efficiency level through introduction of modern technologies and improvement in governance.
The participants called for enhanced energy efficiency and early completion of 747MW combined cycle plant at Guddu to achieve 51 per cent efficiency. They were of the opinion that the financial health of most distribution companies was in poor shape and called for addressing the issue of payables by public sector entities on an urgent basis.
They said the corporate structure of public sector companies should be improved and Electricity Act of 1910 and electricity rules of 1937 should be revisited and updated in line with ground realities.
The participants also called for a drastic change in the fuel mix, moving away from oil-based power generation to make it viable for economy while additions should be based on domestic as well as imported coal.