Economic Coordination Committee backs power tariff re-basing in winter rather than summer
ISLAMABAD: Amid regulator’s opposition, the Economic Coordination Committee (ECC) of the cabinet on Friday endorsed a proposal to shift the annual electricity re-basing exercise, so it would take effect from Jan 1 instead of July 1, to minimise public outcry over hefty bills in high-consumption months.
The sudden shift in tariff re-basing, proposed by the power division, is aimed at staggering the simultaneous impact of quarterly tariff adjustments (QTAs), fuel cost adjustments (FCAs), annual tariff revision and high consumption in peak summer months to low consumption in winter months without negatively affecting annual revenues of the power companies.
Informed sources said National Electric Power Regulatory Authority (Nepra) chairman Waseem Mukhtar, who attended the ECC meeting presided over by Finance Minister Muhammad Aurangzeb, told the meeting that power division’s desire for tariff rebasing with effect from Jan 1 was practically not possible.
Mr Mukhtar “did not oppose the proposal” though he wanted its implementation be aimed for January 2026 due to the legal and financial adjustments and regulatory process spanning over nine months, an official said. The rebasing exercise for implementation in July 2025 was currently midway on the petitions filed by government entities, he argued.
Nepra chief terms power division’s proposal impractical, seeks time for implementation
Power Minister Awais Ahmad Khan Leghari, however, was of the opinion that if not from Jan 1, the rebasing should be actualised by the end of February or March this year, but there was no reasons for people to face high tariff in peak summer months. Some other ministers also supported his point of view.
Speaking to Dawn, an official who attended the meeting said the views of both sides would be presented to the federal cabinet in its next meeting for a final decision. He explained that ECC’s decision on Friday was recommendatory in nature. The power division did not share with ECC any financial impact in terms of a tariff increase or decrease, he added.
However, according to an official statement issued later, the ECC approved the proposal for revision in the annual rebasing determination timeline. It said policy guidelines were also “approved to be issued to the Nepra for revising the annual tariff determination process timeline by amending the legal and regulatory framework”.
The ECC directed that rebasing should be notified with effect from Jan 1, 2025, onward each year, following the completion of regulatory proceedings. “The power division was authorised to approach Nepra for the implementation of these policy guidelines,” the statement added.
The power division had reported that as an unfortunate coincidence, the consumers faced high FCAs as well as the annual tariff rebasing, simultaneously in summer months.
“This increase in tariff coupled with higher consumption leads to significant hike in the consumer electricity bills of summer months which in turn results in un-affordability, public dissatisfaction and nation-wide protests in the country,” it said.
It proposed that the challenge could be streamlined by shifting the timing of annual rebasing from summer to winter months where the electricity consumption stayed lower and any tariff increase could be absorbed in consumer bills without any financial shock to consumers.
Supplementary grants
The ECC approved four supplementary grants worth Rs2.9bn including Rs910m to the national food security division for the establishment of the National Food Safety, Animal, and Plant Health Regulatory Authority, Rs935.75m to the Ministry of Industries for payment of salaries to Pakistan Steel employees, Rs90.27m to the Ministry of Foreign Affairs for payments of PAF and PIA, and Rs941.4m to the Ministry of Interior for Frontier Corps, North.
The ECC also approved a proposal seeking an extension of regulatory duties on finished flat steel products till March 31, as supported by tariff advisory board.
However, the ECC emphasised that no further extensions would be entertained, referencing the federal government’s authority under Subsection 3 of Section 18 of the Customs Act, 1968.
Afghan transit trade
The proposal from the Ministry of Maritime Affairs for withdrawal of bank guarantees for Afghan Transit Trade facilitation through Gwadar Port was also approved, replacing the bank guarantees imposed on Oct 7, 2023 for the import of DAP under APTTA, with insurance guarantees.
Discussing the budget proposals from EOBI and the Ministry of Overseas Pakistanis and Human Resource, the ECC expressed strong displeasure over the delayed submission of the proposals for current year.
“While the budget proposals for FY2024-25 were reluctantly approved, the revised estimates for FY2023-24 were not approved,” it was announced.
Published in Dawn, January 18th, 2025