ISLAMABAD: The federal cabinet is likely to grant an approval to an action plan devised by the Power Division to keep the electricity tariff unchanged for next couple of months.

Sources told Pakistan Today that the action plan devised by the Power Division would be presented in the cabinet meeting that is scheduled to meet on Tuesday under with Prime Minister Imran Khan in the chair.

They said that the cabinet was expected to give an approval to the electricity price freezing action plan as during its previous meeting held on February 25 this year it had decided to keep the prices of gas and electricity unchanged till June 2020.

Sources said that the present tariff of Rs18.65 would jump to Rs24.47 if the government, without approving the action plan, notified the tariff for the month of March 2020 after making some adjustments in the tariff which were already due.

However, the action plan, based on sequencing the existing quarterly adjustments and rationalisation of monthly impact of fuel price adjustment and frequency of its notifications, had been developed to keep the tariffs constant for next 18 months, sources added.

Sources said that the division had already briefed the cabinet on February 25 regarding proposed action plan through a presentation to freeze the electricity prices at current level.

And the cabinet members expressed concerns that the presentation was not covering certain critical areas and lacked substantive information about the sector.

It was also pointed out that the focus should have been on the operational performance of the sector including statistical evidence of improvements in detection of theft, reduction in losses, improved recoveries, etc.

Similarly, the cabinet members, in the previous meeting, also suggested that presentation to the cabinet on power should have included a comparison with the previous regime to show what tangible benefits in quantitative terms had been brought by the present government through better management.

Sharing details of the briefing, sources further informed that Minister for Power Omar Ayub Khan and Power Division Secretary Irfan Ali, while giving an overview of the cost of electricity and the power pricing regime, had said that the cost of electricity was going up and capacity had been added while the previous government deliberately confined the tariff unchanged for almost three years starting from 2015.

Similarly, the capacity additions, exchange rate, variations, resultant capacity payment variations, positive fuel price adjustments and Net Hydel Profit (NHP) remained untreated till 2018.

Subsidies to the tune of Rs127 billion remained unbudgeted and unpaid, which included the Industrial Support Package (ISP) as well.

Moreover, the resultant tariff increase of Rs5.32 per unit to clear the back-log was thus inevitable. However, the present government decided to spread it over a longer period of time, instead of burdening the consumers with tariff increase in one go.

The tariff determination since September 2018 reflected additions in electricity generation capacity, exchange rate (PKR/USD 105 vs 155), treatment of previously untreated capacity payments (Rs226 billion and Rs180 billion), and NHP (Rs146 billion). The present tariff also included a subsidised slab of domestic consumers up to 300 units (single phase).

It was learnt from sources that the cabinet during its February 25 meeting had directed the Power Division to brief the cabinet on salient points of the proposed action plan regarding electricity price freezing action plan during the next cabinet meeting.

A detailed report of an inquiry commission constituted under former SECP chairman Muhammad Ali to examine the causes of high cost of electricity with special reference to Independent Power Producers (IPPs) was also expected to be presented during the upcoming cabinet meeting, sources added.

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