ECC meeting concludes, K-electric tariffs increased

ISLAMABAD: Special Assistant to the Prime Minister on Finance, Hafeez Sheikh chairing a meeting of the National Economic Coordination Committee approved a price hike in K-Electric tariffs, ARY News reported.

According to an official statement issued by finance ministry after the meeting as per recommendations by ECC in its meeting approved with the instructions that the same would be effective after three months.

A decision taken by the National Electric Power Regulatory Authority (Nepra), the government is to notify K-Electric tariff in line with recommendations of the committee formed by the ECC.

The tariff notification will bring K-Electric tariff on a par with other power distribution companies, which will result in an increase of Rs1.09 to Rs2.89 per kilowatt-hour (kWh) for various categories of consumers.

During the meeting, the ECC also took up a proposal for policy guidelines with respect to the sale price of RLNG, the statement added. The ECC was told that given the ring-fenced nature of RLNG and indigenous gas pricing, the sale of RLNG to domestic gas consumers at weighted average domestic tariff/gas sale price on M/s SNGPL network had resulted in accumulative tariff differential/RLNG revenue shortfall of Rs 73.84 billion for the period July-2018 to April 2020.

The ECC was further told that this revenue shortfall had occurred after the adjustment of RLNG impact on cost-neutral basis as per policy whereby the SNGPL sold indigenous gas as RLNG to its consumers and recovered some of the revenue shortfalls whenever the surplus system gas became available.

The ECC was also briefed that the issue of RLNG revenue shortfall had arisen mainly because of the price differential in domestic gas, as 91pc of the domestic gas consumers had been paying an average monthly bill of Rs121, which was many times less than the price of imported RLNG supplied to domestic consumers in the winter months.

The committee considered the proposal and asked the Oil and Gas Regulatory Authority to review it, especially the RLNG revenue shortfall as worked out by the SNGPL, and report back to ECC.

It also decided to further discuss the issue in a small group in order to develop a consensus-based policy decision at the government level so that the creation of a circular debt situation in the RLNG sector could be avoided.

Moreover, the ECC took up and approved a proposal by the Ministry of Information Technology for National Technology Council’s budget for the FY21 (estimate revenue Rs4.59 billion, operating cost Rs4.38 billion and ADP Rs1.23 billion) and NTC budget for FY20 (revised estimates revenue Rs3.95 billion, operating cost Rs3.93 billion and ADP Rs1.08 billion).

The committee also took up a proposal by the Ministry of Industries and Production which submitted that as per the data furnished by National Fertilizer Development Centre (NFDC), the national inventory for urea fertilizer would be below the buffer stock level of 200,000 metric tonnes in the months of December 2020 to February 2021.

The ECC decided that in order to cover this gap and maintain the buffer stocks at the required level, gas at rate of Rs756 MMBTU be provided to two shutdown plants at SNGPL networks, namely Agritech and Fatima Fertilizer, for three months w.e.f. July-September.

This would involve the GoP’s share at Rs959 million, much less than the revenue spent previously on using these plants to produce the urea fertilizer to cover up the shortage.

ECC approves increased tariffs for K-Electric consumers