Govt again defers increase in electricity prices
The decision of the Economic Coordination Committee (ECC) of the cabinet to put off the decision for the third time suggests that the PTI-led government was avoiding the tough economic decision due to fear of public reaction.
Finance Minister Asad Umar presided over a meeting with two items - electricity tariff and a subsidy for consumers of agricultural tube wells in Balochistan - on agenda. However, the ECC deferred its plan to approve the increase in power tariff.
He said that the National Electric Power Regulatory Authority (NEPRA) had proposed an increase of Rs3.98 per unit, adding that the same suggestion would not be approved.
The minister said that the power tariff would not be increased until the recovery system is improved. He called next meeting of the ECC on Wednesday to discuss the recovery of arrears by the power sector.
Earlier, local media reported that around 20% increase in electricity price would be approved by the government. If it is approved, the government can collect additional more than Rs200 billion per year to tackle the growing circular debt.
The announcement pertaining to the increase in the power tariff was made last week by the government after a team of the International Monetary Fund (IMF) announced to visit Pakistan for discussing a bailout package requested by the finance minister during his Malaysia visit.
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The ruling government of Pakistan Tehreek-e-Insaf (PTI) had argued that increase is inevitable because of an addition of Rs35 billion to the circular debt, which in total stands at around Rs1.2 trillion. A leading newspaper citing sources said that increase in the power tariff was a prior action for the IMF loan.
The power sector is facing the massive liquidity crunch due to not increase the tariff, the power division claimed, adding that the banking sector had stopped lending due to surging circular debt.
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Last month, the Economic Coordination Committee (ECC) approved an increase in gas tariff. The ECC also gave a green signal for the addition of a new tariff slab for sale of gas.
There are, currently, three categories of domestic consumers under which Rs110 are charged per mmbtu from those consuming 100 cubic metres per month, Rs220 from the consumers of 300 cubic meters gas while Rs600/mmbtu are charged from those consuming 600 cubic metres and above.
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