Govt seeks Nepra nod to collect add’l Rs76b from consumers during March to June 2023

ISLAMABAD-The federal government has filed a motion with National Electric Power Regulatory Authority (NEPRA) seeking its nod to allow putting burden of an additional surcharge of Rs3.39 per unit on the electricity consumers, having an impact of Rs76 billion from March to June 2023.

An instant motion filed by the federal government with respect to consumer end tariff recommendations of XWDISCOs has requested NEPRA to reconsider and issue: the revised uniform schedule of tariff of XWDISCOs, by incorporating above surcharges, and separate revised SoT for K-Electric after incorporating the above surcharges.

Additional surcharge of Rs3.39/unit to be recovered for period from March to June 2023, to cover the markup charges of PHL loans not covered through already applicable FC surcharge of 0.43/kwh for FY 2022-23. After four months additional surcharge of Rs3.39 per unit will be reduced to Re1/unit to cover the additional markup charges of PHL loans not covered through already applicable FC surcharge @0.43/kwh; the total surcharge becomes Rs. 1.43/unit for FY 2023-24. The levying of additional surcharge of Rs3.39/unit in electricity tariff will enable the government to pay off Rs120b interest on the loans of the Power Holding Company.

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With the application of additional surcharge of Rs3.39/unit, the total surcharge will reach Rs3.82/unit for the four months (Mar-June). Currently, the power consumers are paying Rs0.43/unit surcharge to clear Rs44b for paying off the interest on the loans of the PHL. Now with the levying of special surcharge of Rs3.39/unit, additional Rs76 billion will be collected from the power consumers within next four months March to June 2023. In June 2023, the collection of additional surcharge of Rs3.39/unit will be discontinued and a new additional surcharge of Re 1/unit will be applicable from July 1, 2023, for the next financial year 2023-24. The federal government envisaged arrangements whereby GoP guaranteed finance facilities have been executed through Power Holding Limited (PHL) for the funding the power sector payables. 

Out of the total outstanding finance facilities of Rs. 800.253 billion, as of June 30,2022, servicing of loans amounting to Rs. 246.384 billion is being managed by imposing Financing Cost (FC) surcharge levied @ Rs. 0.43/kWh under dated March 22 2018 as modified from time to time.  This FC Surcharge @ Rs 0.43 /kWh is not sufficient to cover markup charges of total PHL loans. The mark up of remaining loans is being paid from revenue collected through electricity sales and the same constrains the essential fuel and debt payments to the suppliers. Concerning the issue, Economic Coordination Committee (ECC) of the Cabinet, duly ratified by the Cabinet, approved the additional surcharge of Rs. 3.39/unit to be recovered for period from March to June 2023 to cover the markup charges of PHL loans not covered through already applicable FC surcharge @ 0.43/kWh for FY 2022- 23. Total surcharge becomes Rs 3.82/unit for the said period and for FY 2023-24, additional surcharge of Rs. 3.39/unit will be reduced to Rs. 1/unit to cover the additional markup charges of PHL loans not covered through already applicable FC surcharge @ 0.43/kWh; the total surcharge becomes Rs. 1.43/unit for FY 2023-24. 

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The Authority nod has been sought for incorporation of surcharges i.e., Rs. 3.82/unit and Rs. 1.43/unit for four months of FY-23 and FY-24 respectively. The surcharge so collected is within 10 percent of the aggregate revenue requirement of all electric power suppliers, engaged in supply of electric power to end consumers, as determined by the Authority. NEPRA will hold public hearing on the motion on March 2, 2023.  The additional surcharge will not be charged from electricity consumers using less than 300 units. The additional surcharge will be applicable to the consumers of all the Ex-Wapda Distribution Companies (XWDiscos) and also to K-Electric customers.