Nov 03 - 09, 2008

Countrywide protests and demonstration against another hike in the electricity tariff effective from September 01, 2008 has forced the government to defer the decision for the time being. This prompt response from the authorities has pacified the situation and calmed down the agitation which was gaining momentum with each passing day. Public at large who had voted PPP led government into power were anxiously looking towards the rulers for some relief from the ever-rising cost of living as they had been promising during their election campaign.

The latest decision leading to over 30% increase in power tariff came as a bombshell which brought them to streets. Enough is enough. We will not pay the electricity bill at the enhanced rates, they shouted. Sensing the mood of the people the minister concerned announced that the banks have been instructed to receive only 60% of bill amount for the month of September-2008 which had already been dispatched to the consumers.

In the meanwhile, a committee headed by Water and Power Minister Raja Pervez Ashraf and comprising of parliamentarians, officials from National Electric Power Regulatory Authority (NEPRA) and representatives of general consumers will thoroughly examine the tariff structure and the rationale of the new tariff. The Committee has been asked to submit its recommendations within two weeks. It is being generally demanded that a similar committee should examine the pricing structure of oil and gas specially the petrol, diesel and kerosene oil and determine who were prospering by fleecing the consumers by selling these products at more then 100% of the actual cost.

Addressing a press conference at the burning issue, the Water and Power Minister Raja Pervaiz Ashraf said NEPRA determines power prices for distribution companies independently and 'people from all walks of life' could attend the meeting of the committee set up to review the tariff to challenge NEPRA's cost calculations. He denied prices had been increased to recover distribution companies' losses, adding that NEPRA 'had' asked for a 64 percent hike but the government notified an increase of only 31 percent. The government would also spend Rs. 65 billion on electricity subsidies this fiscal year, he added. A global decline in oil prices had not benefited Pakistan's power sector, he said, because furnace oil still stood at Rs 52,000 a metric tone, much higher than the Rs 30,000 per metric tone benchmark for independent power producers.

Water releases from Mangla and Tarbela reservoirs had decreased after Punjab and Sindh declined to receive water to save their share for the coming Rabi crop season, the minister added. Production of hydroelectric power had therefore decreased to 2,000 megawatts a day from the original production capacity of 6,444 megawatts. The country was facing a shortage of up to 7,500 megawatts during peak usage hours, he said. Hydroelectric power production stood at 5,018 megawatts a day in October last year.

The Indus River System Authority would release additional water from dams for Rabi crops in Punjab and Sindh after November 1, he added, and hydroelectric power production would increase. Several thermal power plants had been closed for maintenance, the minister said, resulting in a 1,500-megawatt drop in production. Gas-based power plants were being provided only 30 MMCFD of gas instead of the required 330 MMCFD, he added, and production had therefore decreased by 1.000 megawatts a day. He said global weather change had caused a shortage of water in Pakistan, and while consumption increased by 8 percent every year in the last eight years, not a single power 'production unit was set up during the time. He said the new government would make Pakistan self-sufficient in the energy sector with Basha Dam beginning next year and the utilization of coal reserves.

President Asif Ali Zardari also took notice of the mounting public unrest on the power outage and high tariff. He held a meeting with the Prime Minister on the burning issue and President Asif All Zardari and Prime Minister, Yousuf Raza Gilani on Monday directed the relevant authorities to ensure uniform electricity tariff structure charged by different distribution companies across the country with immediate effect.

The meeting directed the Karachi Electric Supply Company management to issue new electricity bills, while the Pakistan State Oil was directed to ensure unhindered oil supply to all power generation companies as per their requirements. The meeting also decided to ensure uninterrupted gas supply to the power sector. They directed the authorities to avoid unscheduled load shedding and replace the old power plants so that power generation could be enhanced to overcome the power shortfall.

Federal Minister for Water and Power briefed the president and the prime minister on the power situation in the country. Sources said the power distribution companies were charging different tariffs from consumers and after the implementation of uniform tariffs, consumers of all the distribution companies would be charged the same tariff. They said distribution companies like-Peshawar Electric Supply Company and Hyderabad Electric Supply Company were charging higher tariff compared to other distribution companies due to their higher transmission and distribution losses.

They further said distribution companies charging lower tariff would now charge more after the uniform tariff was implemented. Such companies would effectively subsidize the consumers of companies whose tariff was higher before the uniform rates were implemented.

President Zardari also held a meeting with the representatives of business community and assured them that pricing structure of both power and oil are being reviewed to provide maximum possible relief to the consumers. Presiding over a meeting with a delegation of Karachi based businessmen in Islamabad on Thursday last he informed them that the Government was considering to substantially reducing oil prices in the country as well as revise downward the power tariff to reduce the cost of production and doing business of our industry and trade thereby reducing inflation and provide some relief to general public. The president said that the committee working under federal minister for Water and Power was preparing recommendations regarding reduction in power and gas tariffs. The president also agreed to form a council headed by Advisor Finance Shaukat Tarin and comprising cross-section representatives of business community, government officials and representatives of finance sector.

Narrating the details of the meeting with the President, Chairman, Korangi Association of Trade and Industry (KATI) told newsmen that the council will meet regularly on monthly basis and after every three month the President of Pakistan will preside the meeting. He said that the council would review industrial problems and prepare practicable solutions. The council will also prepare proposals for sector-wise revival of industries, so that each sector would be given due importance.

He said that the meeting with President lasted for more than two and half-hours and economic issues in general and oil prices, power and gas tariff, bank markup and high cost of doing business were discussed in detail.

He said that the president of Pakistan told the meeting that Pakistan was passing through serious economic crises and had little space to offer relief. However, the president said the government was making all-out efforts to ease the situation and put the economic indicators on right track, he added. The business community informed the President that gas companies have recently approached Oil and Gar Regulatory Authority for further increase in this tariff by 31 per cent, which will adversely hit industrial production. The business community also briefed the president about the impact of high markup rates on production and exports and demanded that they must be brought down. The president instructed Shaukat Tarin to look into the matter and device a mechanism for reduction.