ISLAMABAD:
The Nawaz government has taken a decision under which consumers will now
pay for debt servicing of the loans of inefficient Gencos and Discos
that are already exposed to huge line losses, resulting in a huge
increase in tariff of up to Rs5 per unit.
The
startling decision has been taken in the ECC (Economic Coordination
Committee) meeting held here on Wednesday with Finance Minister Senator
Ishaq Dar in the chair while approving the summary of the Ministry of
Water & Power.
The summary was to issue policy
guidelines to Nepra (National Electric Power Regulatory Authority) to
incorporate debt servicing on actual basis in revenue requirements of
distribution companies, which would be adjusted in tariff of Discos on
an annual basis.
The ECC also approved the summary of the
Ministry of Water & Power for issuance of policy guidelines to Nepra
to rationalise the T&D loss target of 12.82 percent to 15.75
percent on the same analogy as was done for tariff for the financial
year 2012-13.
The Discos claim that the T&D losses
remained at 17.55% for the year 2013-14. The minister for water and
power informed the ECC that the government in the last one year had
improved in recovery and containing the line losses up to the extent of
2% and will continue to make progress in this regard.
The
decision, the official in the Ministry of Water and Power said,
factually negates the Sector 31 of Nepra Act and verdict of the Supreme
Court which appeared in December 2013 in which it was clearly said that
no policy guideline could be issued to the regulator which directly
affected the consumers who paid the electricity bills regularly. The
apex court had said that losses and inefficiencies should not be passed
on to consumers.
However, DG Media, Ministry of Finance,
Nadeem Kiani said that it would have a zero impact on the tariff of
consumers, but sources in the Ministry of Water and Power argued that
the government had cleverly played by approving the policy guidelines
under which debt servicing had been included in the tariff of Discos.
The
sources said that Nepra, while toeing the directives of the Supreme
Court, has factually reduced the line losses of Discos, which are now
permissible in the tariff owing to which consumers will be having a
benefit of Rs30-35 billion a year. The government has included the debt
servicing component in the tariff to bridge the loss the power sector
will be sustaining because of the reduction of permissible losses in the
tariff by Nepra.
Nepra has reduced the permissible losses
from 16.5 percent to 12.82 percent. The Nepra spokesmen, Safeer, said
that in the past Nepra had disallowed the inclusion of mark-up in the
tariff and if the government gives its new policy guidelines, including
debt servicing component in the tariff of Discos, the authority will
assess as to whether the policies are prudent and if they are found not
prudent, then Nepra will reject the said policies.
To a
question about the impact of the ECC decision on tariff, he said that he
was right now not in a position to work out the impact on the tariff as
it was the job of tariff department of the regulator.
The
sources said that with the reduction in permissible losses, the tariff
will be reduced by Rs3 per unit, but with inclusion of debt servicing
component in the tariff of Discos under the approved policy guidelines
by the ECC, the tariff will surge by up to Rs5 per unit and the
government will give subsidy for Rs2 per unit and pass on Rs3 per unit
to consumers to bridge the loss to be incurred on account of reduction
in permissible losses.
The ECC also approved allocation of
gas from Sara and Suri gas fields, located in district Ghotki, Sindh,
to Genco-II at mutually agreed terms and conditions. It may be mentioned
here that the gas fields remain dormant due to lack of investment.
The
meeting also approved the summary of the Revenue Division for exemption
from income tax to profits and gains derived by coal mining projects in
Sindh supplying coal to power generation projects only.
