Dollar hits record high, gold price soars by Rs2,700 per tola

ISLAMABAD/KARACHI: The US dollar continued its upward trajectory against the Pakistani rupee on Friday. In the open market, the dollar increased by Rs4 to reach Rs157.50. The US dollar rose by Rs2.94 in the interbank market to reach Rs155.84.

Meanwhile, according to Karachi Sarafa Association, the per tola price of 24 karat gold soared by Rs2,700 on Friday and was traded at Rs75,900 as compared to the last closing at Rs73,200. The price of 10 gram gold also witnessed increase of Rs2,315 and was traded at Rs65,072 against Rs62,757 of last day.

Meanwhile, the National Electric Power Regulatory Authority (Nepra) on Friday announced increase in power tariff of Rs1.4902 per unit to collect Rs189.638 billion from power consumers over next fifteen months.

This is second time increase in tariff, as the government had increased power tariff by average Rs1.27/unit in January 2019 on account of capacity payments and then reduced the ballooning power sector circular debt which is currently at around Rs1.4 trillion.

A senior official of the Regulator told The News that they have sent this determination to the government (Power Division) which would notify it for implementation. He, however, said that as the government wants to bring the ballooning circular debt down which is in hundreds of billions of rupees — an irritating factor for the government coupled with pressure from the IMF — the government would soon notify it and from July 2019, it would be charged from the consumers.

The regulator has suggested the government to pass this impact to all consumers, including of less than 300 unit/month; however lifeline consumers up to 50 units/month would be saved from this increase. He said that now, it would be up to the government that whether it is passing this impact on to less than 300 units’ consumers and zero rated industry.

If the government decides not to pass this impact to consumers of less than 300 unit and zero rated industry or others, the government would subsidise them from its kitty.

The government has recently announced inBudget 2019/20 around Rs250 billion subsidy for power sector in next fiscal. The state minister for revenue while announcing the budget said, “Subsidy to low electricity consumers – Around 75 percent of total electricity consumers use less than 300 units of electricity in a month. Government will provide electricity to them at the rate lower than the cost of generation.”

Of the total power sector subsidy, Rs191 billion has been allocated for granting subsidy to power companies (excluding K-Electric) that include Rs162 billion for covering tariff differential claims of Discos, Rs8 billion for agriculture tube wells in Balochistan, Rs18 billion for Wapda to pick receivables from merged districts in KP.

For K-Electric Rs59.5 billion subsidy has been earmarked for 2019/20, that includes Rs25 billion to pick up the utility’s tariff differential, Rs24 billion subsidy to LNG sector for providing gas on lower rates to industrial sector and another Rs10 billion to K-Electric for industrial support package.

The state-run ten distribution companies (Discos) would have to collect this Rs189.638 billion from consumers during this 15-month time. This increase has been announced to recover the ex-Wapda distribution companies’ adjustments on account of variation power purchase price (PPP), including impact of transmission and distribution (T&D) losses, capacity charges and variable operation & maintenance (O&M) charges for the first two quarters (July-Sept & Oct-Dec 2018) of the outgoing fiscal 2018/19.

According to the decision of the Nepra, in 15 months after notification by the government, collection from Lesco would be Rs38.292 billion, Mepco (Rs34.633 billion), Fesco (Rs26.894 billion), Pesco (Rs25.12 billion), Iesco (Rs18.427 billion), Gepco (Rs15.853 billion), Hesco (Rs11.984 billion), Qesco (Rs10.39 billion), Sepco (Rs6.593 billion) and Rs1.453 billion from Tesco.

The authority in its decision has also given previous adjustments. The Authority determined tariffs for seven Discos for the FY 2016-17 & FY 2017-18 individually under the Single Year Tariff Regime (SYT), along with quarterly adjustments of Power Purchase Price (PPP) for the first two quarters of FY 2017-18. Subsequently, the Authority through its decisions in the matter of periodic adjustments allowed the impact of variation in PPP and over/under recovery of allowed Distribution Margin (D.M) for the remaining two quarters of the FY 2017-18 as Prior Year Adjustments (PYA). Similarly, for Discos under the MYT regime, i.e. Fesco, Lesco and Iesco, the Authority through its decisions regarding adjustment in tariff components for the FY 2016-17 and FY 2017-18 allowed PPP variations for the FY 2017-18, and under/over recovery of the allowed Distribution Margin for the FY 2016-17 and FY 2017-18, as PYA. The same were intimated to the federal government for notification in the official Gazette.

But, the federal government filed a motion against it for recommendation of uniform consumer end tariff at national level, which was decided by the Authority on December 19, 2018. The government then notified it at Rs1.27/unit on January 01, 2019 effective from said date.

The existing consumer-end tariff pertaining to FY 2016-17 & FY 2017-18 notified by the federal government vide SRO.1(I)/2019 to SRO.12(I)/2019 dated January 01, 2019, includes all the Quarterly adjustments up to 30th June 2018.