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Govt jacks up surcharge rate on electricity consumers by 165 percent for FY24

ISLAMABAD (Eshfak Mughal):- The Federal Government led by Prime Minister Shehbaz Sharif has decided to jack up rate of additional surcharge for electricity consumers to collect Rs.335 billion during to the next fiscal year due to pressure of the International Monetary Fund (IMF), it is learned.

Sources in the Finance Ministry told the scribe that the decision was taken in the meeting of the Economic Coordination Committee (ECC) of the Cabinet which met under the chairmanship of Finance Minister Ishaq Dar.

On the recommendation of the Power Division, the ECC approved the amount of surcharge may be enhanced to Rs. 335 billion from the (against already approved number of Rs 126 billion on last meeting of the ECC on 10th Feb 2023) for FY 2023-24. The ECC has also approved the surcharge will be collected from the consumers till the elimination of Federal Government obligations.

It is pertinent to mention here that the ECC, on the direction of the International Monetary Fund (IMF), has approved imposition of additional surcharge of Rs. 3.82/unit four months period from Mar-23 to June-23 on 10th Feb 2023. The ECC also approved additional Rs 1 per unit for FY 2023-24 (total surcharge for FY24 becomes Rs I .43/unit) for the consumer categories to cover the markup charges of PHL loans not covered through the already applicable FC surcharge @ 0.43/unit.

The above-mentioned surcharge of Rs 1.43/unit is expected to yield Rs. 126 billion for FY 2023-24 which is not sufficient to meet the power producers’ liabilities, sources further told the scribe. These liabilities are essentially an obligation of the Federal Government with respect to payment of electricity services having nexus with the sovereign guarantees, they further said.

The Power Division proposed to the ECC that the amount of surcharge may be enhanced to Rs335 billion from original estimate of Rs 126 billion for the next fiscal year and onward for the consumers till the elimination of the Federal Government obligations.

The ECC was proposed that the surcharge be applied to K-Electric consumers to maintain uniform tariff across the country. The K-Electric shall remit the surcharge so collected to CPPA-G. The Power Division be authorised to approach NEPRA for incorporation of the above mentioned surcharges in the latest Schedule of Tariff of DISCOs and after the approval of NEPRA, be notified to be extent of modification and supersession of the for the next fiscal year existing notified rate. The ECC was proposed by the Power Division be authorized to approach NEPRA for issuance of separate Schedule of Tariff for K-Electric, on the pattern of DISCOs after incorporating the above surcharge and upon approval of the NEPRA  

While justifying the proposal to increase the rate of surcharge on consumers, the Power Division informed the ECC that the non-payment to power producers may result in loss of generation capacity which can lead to increased load shedding. Further, since the payments to the power producers have been secured by sovereign guarantee issued by the Government of Pakistan.

The power producers shall start calling upon the sovereign guarantees along with the imposition of late payment surcharge.

The Power Division further told the ECC that the Section 31(8) of the Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997 (the Act) empowers the Federal Government to collect surcharges from the consumers for fulfilment of any financial obligation of the Federal Government with respect to electric power services, within the bracket of ten percent of the aggregate revenue requirement of all electric, power suppliers.

Sources in the Finance Ministry further told the scribe that the IMF had turned down the earlier decision of ECC on 10th Feb. The IMF was not happy with the decision to raise Ra126 billion through surcharge during the next fiscal year under the revised management plan to curtail the circular debt by saying the Pakistan authorities whether they do run power sector or run the country.

Yesterday, Federal Minister for Energy Khurram Dastagir told the media that the IMF is not easy with Pakistani authorities on plan for reducing the circular debt during next fiscal year.

It is pertinent to mention here that Pakistani authorities were expecting that Staff Level Agreement will be signed last week.   

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