The federal cabinet has not yet authorized the latest suggested increase of the power tariff by the National Electric Power Regulatory Authority (NEPRA) in a phase-wise way, despite signing an agreement with the IMF to raise the electricity tariff by Rs. 7.92 per unit.
The first phase of the government’s planned increase in electricity rates, which was to take effect on July 1, 2022, could not be carried out as promised to the IMF.
The NEPRA has announced its decision to increase the electricity cost by Rs. 7.92 per unit.
One of the previous measures imposed by the IMF with effect from July 1, 2022, was the raising of the power rate, but the government has not yet carried it out.
Since the increase in power rates cannot be announced retroactively, the administration will now announce the increase in power rates after consulting with the ruling partners.
Khurram Dastgir, the Federal Minister for Power, said on Tuesday that the NEPRA had established the tariff but that the government had not yet authorized and informed the Rs. 7.92 per unit rate.
The subsidy given by the Punjab government to all consumers consuming less than 100 units of energy is another problem that could emerge as a roadblock in the path of smooth sailing from the IMF.
The Punjab administration has now received advice from the Centre to provide this relief by forgoing invoicing for users of fewer than 100 units who have reached the minimum limit during the previous six months.
The Ministry of Power predicted that it shouldn’t cost more than Rs. 46 billion per month for these lower socioeconomic classes.
However, according to some other estimates, if the government waived charges for those who used less than 100 units in the previous month, it would cost Rs. 148 billion, which is unsustainable.
However, senior officials in the provincial government contended that the Punjab government would cut its development budget in order to pay for the payment of the subsidy amount.
Out of a total of 750,000 consumers, 4.8 million consumers from Punjab reside in the service areas of five power distribution companies (DISCOS) and use fewer than 100 units.
The Economic Coordination Committee (ECC) of the Cabinet has already approved the planned increase in electricity rates, which would be implemented in two installments, the first of which would take effect on July 1, 2022, and, increase rates up to Rs. 7.92 per unit.
On August 1, 2022, the second phase of the tariff hike will go into effect, and the third phase will be announced in October 2022.
The summary permitting the DISCOs to increase the average power tariff by Rs. 7.91 as previously determined by the NEPRA has not yet received Prime Minister Shehbaz Sharif’s approval.
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