Power tariff bomb 'backfires'
02 October, 2013
ISLAMABAD: The Supreme Court, while questioning the government's authority to change the electricity tariff, has directed it to submit today (Wednesday) the notification regarding recent increase in power tariff for domestic and agriculture consumers.
The court asked under which law the federal government had the authority to issue power tariff notification in the presence of regulatory body National Electric Power Regulatory Authority (NEPRA). A three-member bench of the apex court, headed by Chief Justice of Pakistan Iftikhar Muhammad Chaudhry issued the direction during the hearing of suo motu case regarding unprecedented load shedding in the country.
The chief justice said that the government was burdening the people who were already paying the bills honestly. He said that no one cares for the poor masses, and noted that the vested interest had their mills running. The bench asked the additional attorney general to provide the September 30 notification of increase in power tariff. When Additional Attorney General Attiq Shah failed to furnish the notification, the court gave him half an hour to obtain the notifications.
When the hearing resumed, the AAG told the court that the Ministry of Water and Power secretary is busy in a meeting. "I spoke to 10 persons in the ministry, including the additional secretary Water and Power, but none of them has the notification," he said. The court directed him to submit the notifications of August 5 and September 30 tomorrow (Wednesday). NEPRA Chairman Khawaja Muhammad Naeem informed the bench that only NEPRA had the authority to determine tariff. He said that after August 5 the authority had not determined any new tariff of electricity, and the government itself decided to increase power tariff on September 30.
Justice Jawwad S Khawaja questioned how had the government assumed the power to fix the electricity tariff. "It has been the tradition not to follow the law," he remarked, questioning if the government would not follow the law, who would. He also said that even if the government had to give subsidy it had to intimate NEPRA. PEPCO Managing Director Zargham Ghulam Ishaq Khan, while justifying the increase in power price, said the rupee has devalued against the US dollar, and the power rate had to be increased as the generation companies are paid in dollars.
The chief justice said that the fuel price has gone down in the international market, but the government has increased its prices instead of reducing them. Earlier, NEPRA chairman told the court that the revenue requirement for power generation for year 2013-14 was Rs 985 billion, but now after the devaluation of rupee it would be Rs 1.3 trillion. He said the circular debt has been paid, but they have to recover Rs 441 billion, with Azad Jammu and Kashmir owing Rs 24 billion, provinces Rs 74 billion, FATA Rs 20 billion, agri-subsidy is Rs 1.2 billion and the private sector had to pay Rs 259 billion.
The NEPRA chairman said that they were planning to use the latest technology to control the menace of non-payment. "With the technology we will be able to suspend the power supply to a house or factory that is not paying the bills." He further stated that if gas is allocated to the power sector the tariff could come down by up to 50 percent.
A lawyer, Mateenul Haq Chaudhry, on Tuesday filed a petition before the Lahore High Court challenging the hike in prices of petroleum products and electricity. The petitioner stated that the nation was already suffering due to price hike and load shedding and this fresh increase in prices would multiply the miseries of the common man. "It is as if the government has dropped electricity and petrol bombs on the already burdened masses," the petitioner exclaimed. He stated that this increase would lead to further unemployment, as a result of the high cost of production and low demand and the entrepreneurs would pass on the additional cost of production to the consumers already facing hardships due to hyperinflation.
The government had on Monday increased the prices of petroleum products and electricity. It notified a significant hike in power prices, ranging between Rs 2.93 and Rs 5.89 per unit for domestic consumers. The increased prices are to be effective from October 1. An official of the Water and Power Ministry said the raise in the power tariff would help the government generate revenue from consumers, a move that will reduce the power subsidy, in accordance with IMF loan conditions. The domestic consumers using more than 200 units will now pay Rs 14 per unit against the old rate of Rs 8.15 per unit, an increase of Rs 5.89 per unit.
Consumers using more than 700 units would face a hike of Rs 2.93 per unit in the tariff. Bulk consumers will now pay Rs 18 per unit, instead of Rs 15.07 per unit. The consumers of the Peshawar Electrical Supply Company and those who use less than 200 units per month would be exempted from the hike in prices. Meanwhile, contrary to the proposals of the Oil and Gas Regulatory Authority (OGRA) and Petroleum Ministry, the government on Monday went ahead with the increase in prices.
The price of supreme petroleum has gone up from Rs 109.50 to Rs 113.25. Whereas, after an increase of Rs 4.69 a litre, the new price of diesel would be Rs 116.95 against the old price of Rs 112.26. The price of light diesel (LDO) has been increased by Rs 2.81, taking it to Rs 101.24 per litre from Rs 98.43. Likewise, the price of HOBC has been increased from Rs 138.33 to Rs 143.9. The price of kerosene oil has also gone up from Rs 105.99 to Rs 108.14.