Govt to carve out more slabs for electricity consumers to reduce subsidy burden

• Government to carve out slabs for electricity consumption of 200-300 units, 301-400 units, 401-500 units, 501-600 units and 601-700 units and so on.
• SAPM Gauhar says people who use 301 units and 699 units are receiving the same subsidy, which takes a toll on national exchequer. 
• The decision for more slabs will help create new categories of electricity tariffs for consumers, he says. 

ISLAMABAD: The federal government is working towards a plan to introduce more slabs for electricity consumers, as per a report in The News. 

The aim behind the move seems to be to ensure implementation of targeted subsidies for budget year 2021-22. 

Special Assistant to the Prime Minister on Power Tabish Gauhar confirmed the development. He said the government is working towards carving out slabs which start from 200-300 units, 301-400 units, 401-500 units, 501-600 units and 601-700 units and so on".

Explaining the rationale behind the move, Gauhar said currently, consumers who use 301 units and 699 units are receiving the same subsidy. He said this is taking a heavy toll on the government's national exchequer. 

"The decision for more slabs will help create new categories of electricity tariffs for consumers and will help reduce the volume of subsidy too," he said. 

Tabish said that the targeted subsidy regime in electricity tariff will be implemented in two phases and under the first phase, the tariff will not be raised. He said under the second phase, there will be a marginal increase in tariff.

However, if the new targeted subsidy regime is implemented, official sources say almost eight million consumers will be out of the subsidy net. At present, 22 million electricity consumers are getting the subsidy. However, it will be contained to 13.9 million consumers, and a hefty Rs42 billion can be saved annually in subsidy expenditure.

Sources said the 301-700 units slab will be divided into four slabs that include 301-400, 401-500, 501-600 and 601-700 and all power distribution companies (DISCOs) will be requesting the National Electric Power Regulatory Authority (Nepra) to make changes in the tariffs of the new category of electricity consumers, keeping in view the targeted subsidy. And all will be done after the decision about quantum of the amount to be budgeted as subsidy for next fiscal 2021-22.

To a question official sources said that Power Division wants the budgeted allocation of Rs500 billion as subsidy for power sector for next financial year 2021-22 and to this effect it has desired from Finance Division the Rs500 billion for subsidy but the Finance Ministry is willing to budget the amount of Rs310 billion.

The federal government, the official sources said, will request the Nepra on behalf of power distribution companies (DISCOs) to create a new category of protected customers, which include those consuming 200kWh in a billing month and consistently consumed 200kWh for the past six months. And the two tariff rates for 50 and 100 units will continue.

Originally published in The News