Prior to the International Monetary Fund (IMF) Executive Board meeting, which is scheduled for July 12, Pakistan would be required to inform the IMF of an increase in the electricity basic power tariff from Rs3.50 to over Rs4 per unit and the gas selling price of 45–50%, The News reported on Monday.
According to a senior official of the energy ministry, the rise in energy tariffs will open the door for the $3 billion plan under the Stand-By Arrangement (SBA) that was agreed upon with the IMF at the staff level.
"The Oil and Gas Regulatory Authority (Ogra) on June 2 announced an increase of 50% (Rs 415.11 per MMBTU) for the consumers of Sui Northern Gas Pipeline Limited (SNGPL), pushing the subscribed gas price up to Rs 1,238.68 per MMBTU," the official stated.
"The regulator also increased the cost of gas for Sui Southern Gas Company Limited (SSGCL) customers by 45% (417.23 per MMBTU) for 2023–2024. The government has not yet announced the rise in petrol prices for the fiscal year 2023-2024, nevertheless.
He said, "The SNGPL still has a cumulative shortfall from the prior year of Rs560.378 billion up to FY23, while Sui Southern has a shortfall of Rs97.388 billion."
The federal government has already announced that petrol sale prices will increase starting on January 1, 2023. According to the government's current policy, high-end consumers cross-subsidize low-end consumers.
From July 1, 2023, the government is most likely to keep up the practice of charging high-end consumers the same amount for petrol as low-end consumers.
He said that the circular debt of over Rs4,300 billion—$1,700 billion in the oil and gas industry and Rs2,600 billion in the power industry—traps the whole energy sector.
The rebase pricing decision by Rs3.5- to above Rs4 per unit, which is to take effect on July 1, 2023, maybe announced soon by NEPRA. The government would then inform it after that.
The basic tariff's capacity charges payments, whose percentage has climbed from 57% to 63% in the upcoming fiscal year, are what should worry consumers the most.
According to well-placed sources in the Power Ministry who spoke to The News, the end customers would likely pay between Rs1.3 trillion and Rs1.5 trillion simply in the head of capacity payments in the fiscal year 2022–23 which ends on June 30.
According to the officials, the number of capacity payments would increase by another Rs1 trillion the following year, reaching Rs2.5 trillion. In this manner, the basic tariff's contribution from capacity payments alone would rise to 63%.
"According to authorities, the country's installed capacity has increased to 44,000 MWs, while the economic study for 2022–2023 indicates that it is only 41,000 MWs. The addition of around 1,500 MWs would occur the next year, increasing the capacity prices that end users would pay.
The basic rate is the Nepra-determined tariff, which for the fiscal year 2022-2023 is set at Rs 24.80 per unit.
According to the officials, the number of capacity payments would increase by another Rs1 trillion the following year, reaching Rs2.5 trillion. In this manner, the basic tariff's contribution from capacity payments alone would rise to 63%.
"According to authorities, the country's installed capacity has increased to 44,000 MWs, while the economic study for 2022–2023 indicates that it is only 41,000 MWs. The addition of around 1,500 MWs would occur the next year, increasing the capacity prices that end users would pay.
The basic rate is the Nepra-determined tariff, which for the fiscal year 2022-2023 is set at Rs 24.80 per unit.
The government has announced it at Rs. 24 per unit, though. If the necessary increase is included, the basic price per unit for FY24 will climb to over Rs29.
The application of taxes, tariffs, and surcharges is the unique prerogative of the federal government; hence, they are not included in the base tariff.
90% of the tariff is made up of the power purchase price (PPP), of which 63% will be made up of capacity fee payments.
As a result of significant system losses, low recovery, and insufficient budget subsidies, the power industry is currently practically unsustainable. Its circular debt has grown to over Rs2.5 trillion, and the government is unable to pay it to powerhouses in exchange for the electricity it purchases from them.
According to a senior official of the energy ministry, the rise in energy tariffs will open the door for the $3 billion plan under the Stand-By Arrangement (SBA) that was agreed upon with the IMF at the staff level.
"The Oil and Gas Regulatory Authority (Ogra) on June 2 announced an increase of 50% (Rs 415.11 per MMBTU) for the consumers of Sui Northern Gas Pipeline Limited (SNGPL), pushing the subscribed gas price up to Rs 1,238.68 per MMBTU," the official stated.
"The regulator also increased the cost of gas for Sui Southern Gas Company Limited (SSGCL) customers by 45% (417.23 per MMBTU) for 2023–2024. The government has not yet announced the rise in petrol prices for the fiscal year 2023-2024, nevertheless.
He said, "The SNGPL still has a cumulative shortfall from the prior year of Rs560.378 billion up to FY23, while Sui Southern has a shortfall of Rs97.388 billion."
The federal government has already announced that petrol sale prices will increase starting on January 1, 2023. According to the government's current policy, high-end consumers cross-subsidize low-end consumers.
From July 1, 2023, the government is most likely to keep up the practice of charging high-end consumers the same amount for petrol as low-end consumers.
He said that the circular debt of over Rs4,300 billion—$1,700 billion in the oil and gas industry and Rs2,600 billion in the power industry—traps the whole energy sector.
The rebase pricing decision by Rs3.5- to above Rs4 per unit, which is to take effect on July 1, 2023, maybe announced soon by NEPRA. The government would then inform it after that.
The basic tariff's capacity charges payments, whose percentage has climbed from 57% to 63% in the upcoming fiscal year, are what should worry consumers the most.
According to well-placed sources in the Power Ministry who spoke to The News, the end customers would likely pay between Rs1.3 trillion and Rs1.5 trillion simply in the head of capacity payments in the fiscal year 2022–23 which ends on June 30.
According to the officials, the number of capacity payments would increase by another Rs1 trillion the following year, reaching Rs2.5 trillion. In this manner, the basic tariff's contribution from capacity payments alone would rise to 63%.
"According to authorities, the country's installed capacity has increased to 44,000 MWs, while the economic study for 2022–2023 indicates that it is only 41,000 MWs. The addition of around 1,500 MWs would occur the next year, increasing the capacity prices that end users would pay.
The basic rate is the Nepra-determined tariff, which for the fiscal year 2022-2023 is set at Rs 24.80 per unit.
According to the officials, the number of capacity payments would increase by another Rs1 trillion the following year, reaching Rs2.5 trillion. In this manner, the basic tariff's contribution from capacity payments alone would rise to 63%.
"According to authorities, the country's installed capacity has increased to 44,000 MWs, while the economic study for 2022–2023 indicates that it is only 41,000 MWs. The addition of around 1,500 MWs would occur the next year, increasing the capacity prices that end users would pay.
The basic rate is the Nepra-determined tariff, which for the fiscal year 2022-2023 is set at Rs 24.80 per unit.
The government has announced it at Rs. 24 per unit, though. If the necessary increase is included, the basic price per unit for FY24 will climb to over Rs29.
The application of taxes, tariffs, and surcharges is the unique prerogative of the federal government; hence, they are not included in the base tariff.
90% of the tariff is made up of the power purchase price (PPP), of which 63% will be made up of capacity fee payments.
As a result of significant system losses, low recovery, and insufficient budget subsidies, the power industry is currently practically unsustainable. Its circular debt has grown to over Rs2.5 trillion, and the government is unable to pay it to powerhouses in exchange for the electricity it purchases from them.