ISLAMABAD: The National Electric Power Regulatory Authority (NEPRA) on Friday announced a significant increase in the basic electricity tariff by Rs 4.96 paise per unit for FY24 on the request of the International Monetary Fund (IMF).
After this move, the government will collect Rs 3.281 trillion from electricity consumers across all distribution companies.
Moreover, the government is also working on a hike in gas prices as the Oil and Gas Regulatory Authority (Ogra) has already set a 45-50% hike in gas prices on June 2, 2023.
The implementation of the decision to increase electricity prices is scheduled to start from July 1, with the tariff increasing from the current Rs 24.82 per unit to Rs 29.78 per unit.
Consumers, who use ToU (time of use) meters, will pay up to Rs 49.35 per unit. Now they will pay Rs 49.35 per unit during working hours from 5 pm to 11 pm and Rs 33.03 during off hours.
This decision has become a double threat for Karachiites as Nepra has also increased the monthly fuel charges adjustment for May by Rs 1.44 per unit which will be reflected in the July billing.
However, the increase in basic tariff will be passed on differently to all categories.
Some categories will face a lesser hike, while for some the hike may go up to Rs 6 per unit depending on the government’s decision.
The power regulator has set an average increase of Rs 4.96 per unit in the base tariff.
Apart from the new basic tariff of Rs 29.78 per unit, end users will also pay a financing cost surcharge of Rs 3.23 per unit from July 1 to generate Rs 335 billion to repay power sector debts and liabilities, which is 2 It is Rs. 6 trillion.
In addition, they will also continue to pay a tariff rationalization surcharge of Rs 0.47 per unit.
With the increase in the basic tariff of Rs 4.96 per unit, the share of payment of capacity charges has increased to 70 per cent, which is Rs 3.472 per unit, and 30 per cent is energy cost.
The increase in the new basic tariff has been calculated based on the dollar value of Rs 287, inflation by 17 percent and electricity generation by 7 percent. Consumers will pay capacity charges in the tariff of Rs 1.874 trillion, up from Rs 1.251 trillion in 2022-23.
In Pakistan, the end user of electricity is being practically driven away from paying the actual cost of electricity to cover up the endless inefficiencies in the power sector.
They are also being charged tariff rationalization, financing cost surcharges, electricity duty, PTV license fee, GST, income tax, additional tax, additional tax and sales tax.
A consumer actually pays 31 percent in the form of surcharges, duties and taxes in addition to the actual cost of electricity.
Electricity duty, a provincial duty, is levied on all consumers ranging from 1.0% to 1.5% of variable charges, General Sales Tax (GST) is levied on all consumers under the Sales Tax Act, 1990 at the rate of 17% of electricity bills. is done .
Income tax is charged at different rates from non-tax payers depending on applicable tariff and amount of electricity bill and commercial consumers are charged 5% on bills up to Rs.20,000 and 7.5% on bills above Rs.20,000. .
A further tax is being levied at the rate of 3% on all consumers – who do not have a Sales Tax Return Number (STRN) except for domestic, agricultural, bulk consumers, and street light connections.
An increase in electricity rates was a key requirement for the IMF to provide financial assistance to Pakistan.
The IMF has consistently urged the government to increase tariffs and end electricity subsidies as part of efforts to reduce the country’s fiscal deficit.
However, Nepra attributes the increase in tariffs to factors such as declining sales, depreciation of the rupee, high inflation, high interest rates, and addition of new capacity.
The estimated total revenue requirement for distribution companies in FY 2023-24 is estimated at Rs 3.281 trillion, with expected sales of 110,165 GWh.
During the last financial year, the base tariff was increased by Rs 7.91 per unit, affecting Rs 2.8 trillion, but it was implemented in three staggered phases.
