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ECC ends subsidy for power users

03 February, 2014

ISLAMABAD: The Economic Coordination Committee (ECC) of the Federal Cabinet had given its approval to end subsidy for all categories of power consumers except lifeline consumers and also approved implementation of equalisation surcharge to maintain uniform power tariff across the country.

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ISLAMABAD: The Economic Coordination Committee (ECC) of the Federal Cabinet had given its approval to end subsidy for all categories of power consumers except lifeline consumers and also approved implementation of equalisation surcharge to maintain uniform power tariff across the country.

Available documents and a copy of ECC's summary has disclosed to The Nation that the ECC had approved National Tariff and Subsidy Policy Guidelines 2014 on January 28, which was submitted by Water and Power Ministry. With this approval, the highest economic forum (ECC) of the country has made an end to the subsidy, which was being enjoyed for a long time by the domestic, agri, commercial, industrial power consumers use above 200 units of power in a single month. Similarly, to maintain equal power tariff across the country, implementation of equalisation surcharge has been approved. And, under the new equalisation surcharge, power consumers of Punjab province would bear additional burden of other province.

"Equalisation surcharge is an inter-Disco subsidy. As long as government maintains the uniform national tariff, there is need to be equalisation surcharge, to balance the different cost profiles of different distribution companies. Nepra shall develop a mechanism to determine the quantum of the equalisation surcharge. This separate amount shall appear separately on the bills of applicable customer categories," the document said.

Following the approval, in future power consumers use sufficient units of power would bear the burden of domestic power consumers that use 200 units in a month. Again, the ECC has approved power tariff hike to save electricity. Again, the ECC has approved to recover billion rupees worth losses of power distributing companies (Discos) that were registered in the past. Apparently, the objective of the National Power Tariff and subsidy policy guidelines 2014 is to state the intent of the Government of Pakistan with respect to electricity pricing and cost allocation so that policy-makers, planners, companies, regulators and customers have a concrete picture of the steps necessary to achieve a sustainable power sector for the country.

Sources also told that the government has to pay above Rs145 billion subsidy to the power sector in the name of inter-disco to maintain uniform tariff and to bear the burden of domestic power consumers use 200 units a month. However, already burdened power consumers with effect to the ECC's approval would bear heavy burden of above Rs295 billion.

"The GoP will continue to provide direct subsidies to the extent they consider appropriate. Subsidies will be targeted effectively and in transparent manner to reach consumers using not more than 200 units per month in accordance with the National Power Policy 2013 and especially those currently on the lifeline tariff. The average tariff of all residential customers will correspond to the cost of service by obtaining cross subsidies from other customers," document reads.

Courtesy: The Nation


 
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