People get an electric shock

ISLAMABAD:

Federal Energy Minister Hammad Azhar said on Friday that the government would increase the electricity tariff by 1.39 rupees per unit from November 1 due to the country’s growing circular debt.

Addressing a press conference accompanied by Minister of State for Information and Broadcasting Farrukh Habib, Hammad stressed that the increase in the electricity tariff would not apply to vital and domestic consumers, who used less than 200 units of electricity. “Therefore, this increase is not applicable to 46% of the consumer base,” he said.

He said the main component of the circular debt was the capacity payment to power plants which had now reached 700-800 billion rupees from 150 billion rupees in 2013.

He said circular debt would rise to 2.5 to 3 trillion rupees by 2030, saying previous regimes had set up expensive and unnecessary power plants in the country.

The National Electricity Regulatory Authority (Nepra) has revised its target from 15% to 13%.
“Despite all of this, there is a difference between Rs1.5 and Rs2 in the rate at which the government buys and sells electricity. This is the reason for the increase in circular debt.”

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Hammad further noted that the country now has the capacity to generate enough electricity and that is why the government wanted to increase demand.

“We introduced an industrial package last year which was successful because we saw a 15% increase in demand,” he added.

“We have also seen a 6-7% increase in demand for electricity, as peak hours for the industrial sector have been removed. “

The minister also announced that the government has decided to suspend ongoing programs and new connections of Sui gas companies until legislation on a new pricing mechanism to charge consumers for imported gas is completed.

“Local gas reserves [are] running out at the rate of 9pc per year. The government does not have a legal mechanism to collect the costs of imported gas from consumers. We have forged a consensus on a new pricing mechanism, but until its legislation, the government stops any expansion of national gas networks, ”the minister tweeted earlier today.

Later at the press conference, the minister argued that the need for the new mechanism – the weighted average cost – was a measure to overcome the gas shortage, which he attributed to the depletion of local reserves.

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He noted that local gas reserves were being depleted at such a rapid rate that they were now insufficient for fertilizers and other industries. “Currently, only 28% of total households receive gas through pipelines. “
“We also plan to change the law to provide LNG to domestic consumers,” he said. “The government will not reduce demand without ensuring an adequate gas supply.”

He dispelled the impression that the gas shortage was the consequence of an insufficient supply of LNG. “There is enough LNG in the system. “

The minister stressed that the whole world was currently facing a gas crisis because its supply had been affected because of the Covid-19. He argued that gas prices had increased around the world.

“Pakistan, however, is not facing such an intense gas crisis,” the minister said. “The government is working on the North-South gas pipeline project with Russia. “

He said the circular debt, which had grown at a rate of 450 billion rupees when the PTI came to power, is now increasing at a reduced rate of 150 billion rupees.

He added that the new mechanism would not affect the seasonal electricity package or the industrial package.

(With APP input)


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Maude J. Weber

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