Govt to increase power tarrif as country’s circular debt soars: Hammad Azhar

ISLAMABAD: Federal Minister for Energy Hammad Azhar  on Friday said that the government has decided to increase the power tarrif as the circular debt of Pakistan witnesses a hike.

Azhar, accompanied by State Minister for Information and Broadcasting Farrukh Habib at a press conference in Islamabad, said that the increase of Rs1.39 in the power tariif will be applicable in the country from November 1.

“Since we are now capable to generate enough electricity, we want to increase the demand. We introduced an industrial package last year and saw a 15% increase in demand as it became successful," said Azhar.

"Meanwhile, we have also seen a 6-7% increase in the demand for electricity as the peak hour charges for the industrial sector have been removed,” he added.

The minister said that keeping in view the success of this package, the government decided to introduce another package — known as the seasonal electricity package — under which consumers who use an extra unit compared to their last year's usage will get an extra discount.

Shedding light on further steps, he said that the government has closed old generation companies (gencos), while the National Electric Power Regulatory Authority (NEPRA) has also revised its target from 15% to 13%.

"Despite all this, there is a difference between Rs1.5 to Rs2 in the rate at which the government is purchasing and selling electricity, and this is the reason behind the surging circular debt," he said.

"A major chunk of circular debt is because of capacity payments. And because of the wrong decisions taken by the previous governments, we have to increase the power tariff," he said, adding that the government had proposed to NEPRA that the power tariff  be increased by Rs1.49 per unit.

"This increase in power tariff will not be applicable to the lifeline and domestic consumers — who use less than200 units of electricity — hence, this increase is not applicable on the 46% of the consumer base," he clarified.

Moreover, this will not affect the seasonal electricity package or the industrial package.

Worldwide gas crisis

Azhar said another major issue the country is facing is related to the shortage of gas.

“Currently, the entire world is facing a gas crisis — whether it's a developed country or an under-developed country — because the supply of gas has been affected due to COVID-19, while prices also surged,” he added.

“Pakistan, however, did not face such an intense gas crisis,” the minister said, adding that the government is working on the North-South Gas Pipeline Project with Russia.

"We are also planning to change the law to provide LNG to domestic consumers,” he said. “The government will not curtail demand without ensuring proper gas supply.”

He continued: "In order to resolve the gas crisis issue, we are blocking all ongoing and future gas schemes.”