Monday, May 30, 2022

To restore IMF deal, price of electricity likely to go up too by July

Increase of up to Rs7-7.50 per unit in electricity base tariff expected, according to senior govt officials

International Monetary Funds (IMF) — AFP
International Monetary Funds (IMF) — AFP
  • Substantial hike in Pakistan's electricity base pricing expected to revive IMF programme.
  • Current average base tariff is Rs16.64 per unit.
  • The IMF has been asking for a raise in electricity base rate for 2022-23 for a long time.

ISLAMABAD: A substantial hike in the base price of electricity of up to Rs7-7.50 per unit is expected to be implemented on July 1, 2022 to ensure the restoration of the IMF programme, according to senior official sources, The News reported Monday.

"The current average base tariff is Rs16.64 per unit, which is likely to increase by Rs7 to Rs7.50 per unit to Rs24.14 per unit".

Federal Minister for Power Division Khurram Dastgir Khan said he couldn't say how much the predicted rise in the base rate would be because the exercise to decide on it is still underway and senior officials from the ministry and the National Electric Power Regulatory Authority (Nepra) were involved. After the rebasing process is complete, a new base tariff will be decided and implemented on July 1, 2022, following the announcement of the budget.

According to official sources, the IMF has been asking for a raise in the electricity base rate for 2022-23 for a long time, as new power plants and transmission and distribution projects have been added to the national grid.

Some of the new projects, including an 878-km-long 660kV high voltage direct current (HVDC) transmission line, two nuclear power plants (k-2 and k-3), China Hub power plant, Engro power plant, and RLNG-based power plant at Trimmu, Jhang, Punjab, and others, are now connected to the national grid.

The base tariff is the average cost of energy, which includes the costs of power plants, transmission and distribution, as well as fuel and operations and maintenance.

It also includes power plant capacity payments, which now range between Rs800 and Rs850 billion per year and are paid by customers in the tariff, with capacity payments expected to rise to Rs1.4 trillion per year in the next budgetary year 2022-23. "As a result of new project additions to the system, rebasing of power tariffs is unavoidable, with tariffs rising by up to Rs7.50 per unit."