Task Force to scale down power tariff by 20pc in next 6 months

ISLAMABAD: The Task Force on Power Sector will be able to reduce the power tariff by 20 percent in the next six months after the government succeeds in switching all the IPPs to the task and pay mode, profiling the state and CPEC power projects loans, improving the transmission system enough to lift electricity from the south to Punjab, reducing the taxes volume on the power bills and minimizing power theft.

“We have decided to scratch down the power purchase agreements of five power plants set up under 1994 and 2002 power planets on the insistence of the NTDC which will help the government save Rs300 billion in next 3-10 years, ” a senior official of the Power Division told The News.

“Right now the consumers are paying 32 percent taxes on electricity bills and this is how the government is reaping Rs700-800 billion revenue per year through the electricity bills. The task force is also working on reducing the tax burden.”

The government is still unable to carry cheaper electricity from South (Sindh) to Lahore (Punjab), which is why the costly electricity is generated, which results in more increase in the basket tariff for end consumers. Such issues are badly needed to be corrected by the Power Division.

“The government also needs to increase its emphasis on reducing the transmission, distribution and recovery losses which can lead to relief of Rs1.25 per unit.It also needs to expedite diplomatic efforts with top-level Chinese leadership for profiling of the Chinese loans obtained for CPEC projects from 10 to 20 years, which can also help give relief of Rs4 per unit.”

“The Power Division should not waste more time and ensure immediate uploading of the cheaper electricity into the system to the load center of Punjab from Sindh, as it will also help give a relief of Rs1.90 per unit. The electricity theft in the system stands at Rs600 billion per annum and it is contained to Rs300 billion a year; the tariff could be further reduced by Rs3 per unit.”

However, now we all are set to switch 17 more IPPs set up under 1994 and 2002 power policies to the take and pay mode from the existing tale or pay mechanism. This means, they would not be paid the capacity payments, however, they would continue to be paid only for the electricity to be purchased from them.

The task force is endeavoring to reduce the tariff of wind and solar power plants. Some solar plants are charging Rs27 per unit which should be at Rs7-9 per unit, and the wind IPPs are getting Rs40 per unit which needs rationalization, he said.

The government would also set the tariff of electricity at Rs7-9 per unit that solar panels-on-roof generate and sell it to the national grid through net metering.The existing tariff stands at Rs21 per unit at which the people are selling to the national grid and getting electricity from the system at Rs42 power unit during the whole night.

“We have started negotiations with the nuclear power plants for profiling of loans apart from the talks with the Chinese government on the projects set up under the umbrella of CPEC. The profiling of the loans’ payment from 10-20 years would provide a relief of Rs3.5 per unit. If the taxes are reduced by 50 percent, the relief of Rs4 per unit would be possible in the tariff. The government power plants which produce the 52 percent electricity would also be treated.

“However, once the private power market regime is established, the said 17 IPPs would be allowed to sell electricity under the CTBCM (Competitive Trading Bilateral Contract Market) regime”, he said.