Freezing FPA

Economic Coordination Committee (ECC), in its meeting on Thursday, has freezed quarterly increase in electricity price by way of fuel price adjustment (FPA). But in the same meeting a summary moved by the energy division was approved, seeking therein 7 percent increase in original power tariff for foreign companies that produce coal based thermal power. The decision has neutralized the temporary relief that is allowed to all categories of consumers under fuel price adjustment.

The last PML-N government had made a contract with Chinese Companies, agreeing therein not only exorbitant capital expenditure for the construction of hydel and thermal power plants, but fixed a tariff of 8 cents per KWH against the 5 cents and below in other jurisdictions. The increase of 7 percent in electricity tariff will hit hard the consumers, increase its theft and decrease its demand as it will jack it up to 9 cents per unit. The demand for electricity consumption has already dropped to 10000 megawatt against installed capacity of over 20000 megawatt. Lowering of tariff creates demand for electricity among all categories of consumers and its hiking squeezes the demand. Domestic and commercial consumers have increased their reliance on solar systems and industrial consumers meet bulk of their consumption from captive power plants.

The irrationally high electricity tariff with taxes and surcharges had proved detrimental to production of manufacturing sector by making its products non-competitive in the domestic and foreign markets. It was because of this reason that federal government decided to provide electricity to export industries at subsidized tariff of 7.5 cents.