Affordability thresholds crossed? Nepra members question massive tariff hike for K-Electric consumers

For some households, the per unit tariff will reach Rs52 minus taxes and duties

KARACHI (Web Desk) – So the consumers of K-Electric in Karachi and surrounding areas are supposed to pay more after the Power Division proposed a hike of Rs10.32 in tariff as Pakistan is expected to experience sustained increase in inflation.

However, the net increase is reduced to Rs8.77 after the current QTA (Quarterly Tariff Adjustment) of Rs1.55 per unit expires in September.

But the actual [cumulative] increase in power tariff would be up Rs11 for domestic thanks to the different taxes we pay in our bills.

Thus, the per unit price would for surge to Rs52 [excluding taxes, surcharges and various levies] the domestic consumers with a consumption of over 700 units.

Meanwhile, the electricity rates for industries minus the taxes would reach Rs47 per unit from the current level of Rs37 after a tariff hike of Rs10.

HAS POWER CONSUMPTION BECOME UNAFFORDABLE?

The massive hike is result of the three separate QTAs demanded by the Power Division on the account of outstanding ones as the QTA is supposed to be for one quarter only which are three in this case.

Read more: Increasing energy prices, interest rates, tax collection remains IMF's focus

On Monday, there was a strong opposition to the move – not by industrialists and political leaders but also the Nepra (National Electric Power Regulatory Authority) members at a public hearing held in connection with the Power Division’s request.

“This is terrible. How would the consumers absorb this and how would industry survive?” questioned Nepra member Tariff representing Balochistan – Muthar Niaz Rana.

Similarly, the Nepra officials from Sindh and Pakhtunkhwa said industries would not be able to meet export orders and lead to greater unemployment which should be a cause of grave concern for all. It was going to hamper economic activities and negatively impact recoveries, thus leading to a vicious cycle of further tariff increases.

A Nepra official also noted that the Power Division had made no progress on the directives about conducting a sensitivity analysis of the tariff policy to see if different consumer categories could pay or if it had already crossed affordability thresholds.

Read more: Egypt inflation hits record high of nearly 40pc as dollar crushes its currency just like Pakistan's

On the other hand, another Nepra member lamented that the Power Division had failed to provide legal cover to all past adjustments even though it was twice given a draft of the legal language.

Business leaders Tanveer Bari and Arif Bilwani as well as Jamaat-e-Islami leader Hafiz Naeemur Rehman said it appeared the Power Division had decided to close down the industries.

“We reject any imposition of quarterly adjustments because of increase in the base tariff, tariff is already very high. Further increase in tariff will close existing industry as it cannot survive in international market,” said Bari.