Prime Minister Shehbaz Sharif on Monday said that 63% of the domestic consumers using up to 200 units per month would be exempted from the recent increase in power tariff.
Besides, he said a partial subsidy was also being given to the consumers of up to 300 units per month which comprise around 31% of the total domestic consumers.
“Due to the toughest conditions from the International Monetary Fund (IMF), the government had to raise the electricity prices but I stressed that the burden should not be passed on to the protected segments of the society,” he said after witnessing the signing of a framework agreement between State Oil company of Azerbaijan Republic (SOCAR) and Pakistan LNG Limited (PLL) here.
The framework agreement was signed by Managing Director PLL Masood Nabi and Chief Executive Officer of SOCAR Trading Mariam Almaszade.
Minister of State for Petroleum Musadik Malik, Governor Punjab Baleeghur Rehman, diplomats, and government officials were also present on the occasion.
Under this framework agreement, SOCAR Trading has offered LNG supply to Pakistan in the form of one cargo per month, on flexible terms and with credit lines for 30 days after delivery of the cargo in one year contract which is extendable by another year.
The prime minister said it was really a great day as “we are standing here as brothers from two brotherly countries Pakistan and Azerbaijan”.
He expressed wishes to the President of Azerbaijan Ilham Aliyev whom he met in Baku a few weeks ago and thanked him for finalizing this agreement.
“We had an extremely productive and very fruitful discussion over there as to how to promote economic relations between the two friendly countries,” he said adding that immediately on his return to Pakistan, the Pakistan government extended approval to the Azerbaijan airline to land in Islamabad, Lahore and Karachi.
“This is a big step forward to promote tourism and investment and exchange of delegation between the two countries.”
The prime minister also appreciated and thanked Finance Minister Ishaq Dar, Dr Musadik Malik, secretary of petroleum, Pakistan’s ambassador in Azerbaijan, CEO SOCAR Trading, and MD PLL for their work to conclude the framework agreement.
The ambassador of Azerbaijan in Islamabad on the occasion said this framework agreement would help further strengthen bilateral economic relations.
He said cooperation between the two countries had remained sustainable since the start of the diplomatic ties between the two brotherly countries.
The diplomat added that approval of giving airspace to the Azerbaijan airline would increase the number of visitors and business delegations between the two counties.
He informed me that a team of horticulture experts from Azerbaijan was also arriving in Pakistan to share their first-hand experience in the sector with the Pakistani authorities.
Earlier this month, the government implemented an increase in the average power tariff by Rs4.96 per unit for the financial year 2023-24. This adjustment placed an additional burden of Rs3,281 billion on consumers throughout the ongoing financial year.
The tariff hike can be seen as a fulfillment of the government’s commitment to the IMF to raise electricity rates. Following this recent increase, the average national tariff has risen from Rs24.82 per unit to Rs29.78 per unit.
“The revised National Average tariff for the FY 2023-24 has been determined as Rs.29.78/kWh, which is Rs.4.96/kWh higher than the previously determined national average tariff of Rs24.82/kWh,” the National Electric Power Authority (Nepra) said in a statement.
When the present coalition government came to power, it increased the base power tariff from Rs16.91 per unit to Rs24.82 per unit in July last year. The increase of Rs7.91 per unit was aimed at recovering an additional Rs893.83 billion from consumers during the fiscal 2022-23.
Besides, the government had also imposed over Rs3 per unit surcharge. Now, the power regulator had made another increase of Rs4.96 per unit to Rs29.78 per unit.
Sources told The Media that the consumers would pay another 25% additional tariff on the average power tariff on account of sales tax, income tax, and tariff financial cost.
“There will be another cost on account of fuel price adjustment, which consumers would be paying due to variation in fuel cost,” the sources added.
Since the power distribution companies (DISCOs) have failed to bring improvement in the recovery of electricity bills, the circular debt keeps piling up. At present, the circular debt in the power sector has risen to Rs2.6 trillion from Rs2.3 trillion, when the coalition government came into power.
Moreover, the poor recovery of electricity bills by DISCOs had also caused jacked up the receivables against defaulters. DISCOs have to collect Rs2.5 trillion from power consumers.
During the last 10 months of the previous financial year, the recovery of electricity bills was 86% which was the lowest, the sources said.
