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Power tariff up by 5.5pc; 16pc hike in petrol prices likely
After the National Electric Power Regulatory Authority approved on Thursday an increase of 5.5 per cent (33 paisa per unit) in the power tariff, a senior finance ministry official said the government was considering raising petroleum prices by up to 16 per cent (Rs10 per litre) from March 1 because of a surge in international oil market.
Nepra allowed the increase in electricity rates of all distribution companies of Wapda for the month of January on account of the monthly fuel adjustment. The new rates to be charged from consumers for the current billing month, would not apply to lifeline consumers using less than 50 units per month and those of the Karachi Electric Supply Company (KESC), a Nepra official told.
He said Wapda`s distribution companies had demanded a tariff increase of about 40 paisa per unit, but after a public hearing Nepra allowed the 33 paisa increase. He said the generation from hydropower resources had remained limited to only 16 per cent while furnace oil-based generation stood at more than 48 per cent and gas-based production at 26.5 per cent.
The finance ministry official said the ministry of petroleum and natural resources had updated Finance Minister Dr Abdul Hafeez Shaikh about the rising trend in oil prices in the international market. The minister later briefed the president and the prime minister on the price situation.
Prime Minister Yousuf Raza Gilani who has been holding the petroleum minister`s portfolio since reducing the size of the federal cabinet, said the government would take a decision about the price increase on Monday, most probably after consulting coalition partners and other political parties.
The official said that the petroleum ministry did not propose an increase in oil prices because of the strong opposition from the political parties in recent months. The ministry, however, told the finance ministry that crude price in the Middle East had touched $106 per barrel, an increase of 9 per cent during the current month. Likewise, prices of diesel and petrol have also gone up by 10-11 per cent during the current month.
In petroleum ministry`s view, the prices of petrol would have to be increased by Rs8 per litre and that of diesel by Rs10 per litre in case the government decides to pass on the impact of international prices to consumers.
The petroleum ministry has estimated a revenue loss of about Rs11.5 billion in case prices are kept unchanged at the existing level as the government revenue on account of petroleum levy would stand completely wiped out and the government will have to provide some subsidy to maintain current prices.
He said a revenue loss of Rs13 billion had already taken place during the months of December, January and February, putting the total loss at about Rs24.5 billion.
The finance ministry official said the petroleum ministry had been directed at a separate meeting held by Secretary Finance Dr Waqar Masud to work out how much price increase was required if the petroleum levy was kept at zero because it was not possible for the government to inject funds from budgetary operations to maintain current prices.
Initial estimates suggest an increase of about Rs2 per litre would be unavoidable even if no petroleum levy was charged on petroleum products. The finance ministry official said the 17 per cent general sales
tax on petroleum products could not be cut because that would require an amendment to the finance bill by parliament.
Power tariff up by 5.5pc; 16pc hike in petrol prices likely | Newspaper | DAWN.COM
After the National Electric Power Regulatory Authority approved on Thursday an increase of 5.5 per cent (33 paisa per unit) in the power tariff, a senior finance ministry official said the government was considering raising petroleum prices by up to 16 per cent (Rs10 per litre) from March 1 because of a surge in international oil market.
Nepra allowed the increase in electricity rates of all distribution companies of Wapda for the month of January on account of the monthly fuel adjustment. The new rates to be charged from consumers for the current billing month, would not apply to lifeline consumers using less than 50 units per month and those of the Karachi Electric Supply Company (KESC), a Nepra official told.
He said Wapda`s distribution companies had demanded a tariff increase of about 40 paisa per unit, but after a public hearing Nepra allowed the 33 paisa increase. He said the generation from hydropower resources had remained limited to only 16 per cent while furnace oil-based generation stood at more than 48 per cent and gas-based production at 26.5 per cent.
The finance ministry official said the ministry of petroleum and natural resources had updated Finance Minister Dr Abdul Hafeez Shaikh about the rising trend in oil prices in the international market. The minister later briefed the president and the prime minister on the price situation.
Prime Minister Yousuf Raza Gilani who has been holding the petroleum minister`s portfolio since reducing the size of the federal cabinet, said the government would take a decision about the price increase on Monday, most probably after consulting coalition partners and other political parties.
The official said that the petroleum ministry did not propose an increase in oil prices because of the strong opposition from the political parties in recent months. The ministry, however, told the finance ministry that crude price in the Middle East had touched $106 per barrel, an increase of 9 per cent during the current month. Likewise, prices of diesel and petrol have also gone up by 10-11 per cent during the current month.
In petroleum ministry`s view, the prices of petrol would have to be increased by Rs8 per litre and that of diesel by Rs10 per litre in case the government decides to pass on the impact of international prices to consumers.
The petroleum ministry has estimated a revenue loss of about Rs11.5 billion in case prices are kept unchanged at the existing level as the government revenue on account of petroleum levy would stand completely wiped out and the government will have to provide some subsidy to maintain current prices.
He said a revenue loss of Rs13 billion had already taken place during the months of December, January and February, putting the total loss at about Rs24.5 billion.
The finance ministry official said the petroleum ministry had been directed at a separate meeting held by Secretary Finance Dr Waqar Masud to work out how much price increase was required if the petroleum levy was kept at zero because it was not possible for the government to inject funds from budgetary operations to maintain current prices.
Initial estimates suggest an increase of about Rs2 per litre would be unavoidable even if no petroleum levy was charged on petroleum products. The finance ministry official said the 17 per cent general sales
tax on petroleum products could not be cut because that would require an amendment to the finance bill by parliament.
Power tariff up by 5.5pc; 16pc hike in petrol prices likely | Newspaper | DAWN.COM
