Power tariff & eatables’ price hike

NATIONAL Electric Power Regulatory Authority (NEPRA) has approved yet another increase of Rs. 0.83 per unit in electricity tariff under monthly fuel price adjustment. The increase, if allowed by the government, will shift further financial burden to the honest consumers, not affecting the running and new defaulters. NEPRA decision is in sharp contrast with federal cabinet decision the other day that deferred electricity tariff increase. It gives the impression as if the regulator is functioning as a supreme body over the cabinet. It is the same NEPRA, which did not express reservation against the anti-consumers’ and anti-national interest power policies of previous governments, particularly the capacity payment clause and indexation of tariff with the US dollar for local IPPs, which put the economy on the tailspin. Skewed priorities for thermal power generation from diesel and furnace oil and payment liability for idle plant capacity agreed under shady deals pushed the electricity tariff to the highest ceiling in the region. The exorbitant fuel price and the inflated price agreed in the power purchase agreement landed power sector in the trap of circular debt which is now well over Rs.2.2 trillion.
Power Division claims to have reduced the per month increase in circular debt accumulation to Rs.12 billion. On the contrary, NEPRA has accessed it over 30 billion. The swelling circular debt explains that assessment of regulator is correct. Expensive fossil fuel for thermal power generation, technical losses by the ragtag transmission and distribution system and accumulated outstanding dues of the past several years are the major contributory factors of fast piling of this debt, which power division had claimed to clear by December 2020. Trade bodies have always criticised the frequent and irrational increases in electricity tariff. They rightly argue that power tariff hike will neutralize the interest rate cut of 625 basis points for revival of economy in a state of deep stagflation. Further increase in tariff will abnormally jack up the cost of production, wiping out the thin comparative advantage of export products. According to FPCCI President high cost of electricity is the major stumbling block in the industrialisation of the country. And the government wants to start the second phase of industrialisation by setting up special economic zones. Will sky-high electricity tariff not scare away foreign and local entrepreneurs?