The National Electric Power Regulatory Authority (NEPRA) has indicated more increases in electricity tariffs through Quarterly Tariff Adjustment (QTA), the media reported. This comes as the rupee continues to plunge against the dollar, that too more than NEPRA estimated.
Chairman NEPRA had earlier held a hearing on the government’s request for increasing the power tariff by Rs. 7.91. The federal government submitted the request to NEPRA in order to ensure uniform power charges across the country.
The base tariff of Rs. 7.91 will be increased in three phases Rs3.5 per unit in July 2022, Rs3.5 per unit in August-September, and Rs0.91 per unit from October onward. Pertinent to mention that with this increase, the cumulative tariff of consumers will touch Rs40 per unit including taxes and surcharges from the existing Rs27 per unit.
However, the NEPRA Chief also defended the price hike, criticizing the government’s power generation policies. NEPRA Chairman Tauseef H Farooqi said the government committed a “fundamental blunder” by opting for imported fuel projects.
Rupee value in decline
Furthermore, NEPRA Chairman argued that fuel cost has increased by eight times and the rupee has touched the Rs222 per dollar mark which are the main reasons for the increase in tariff.
“If the rupee value is reduced to half and fuel cost increased 8 times, then the cost of electricity generation increased by 16%. The country should not have opted for power generation on imported fuel,” he said.
Pakistan is currently facing a tough situation as the rupee reached a new all-time low of Rs221.99 to a dollar in the inter-bank market. According to reports, the free fall of the Pakistani currency accelerated after Fitch Ratings downgraded the country’s credit rating outlook to negative from stable before domestic financial markets opened in the morning
The state bank analysis clearly depicts the fall in the Rupee value since Monday is the result of by elections’ result.
Political uncertainty is contributing to rupee depreciation.
Isn’t it time to sit together and talk about the way forward ? #Pakistan pic.twitter.com/zsJs2gI2yq
— Nadeem Malik 🇵🇰 (@nadeemmalik) July 20, 2022
Additionally, the strengthening of the US dollar against other global currencies also caused a fresh decrease in rupee value in recent months. As per NEPRA Chief’s argument, if the rupee continues to fall, then more hikes in power tariffs will take place.