ECC meets today, tariff hike likely to be delayed

ISLAMABAD: The government is expected to delay increase in electricity tariff for at least a fortnight owing to upcoming by-elections even though it is once again on top of the agenda of the Economic Coordination Committee (ECC) of the Cabinet.

The ECC meets on Tuesday with Finance Minister Asad Umar to take up a four-point agenda. On top of the list is summary of the Power Division ‘Tariff rationalisation for Power Sector’.

Other items to be discussed by the ECC on Tuesday including an update on K-Electric shares purchase by Shanghai Electric Power Company Ltd, revision in cess rates of tobacco for the year 2018-19 and a report on LNG terminals.

Informed sources said the PTI candidates for by-elections due on Oct 14 had complained to Prime Minister Imran Khan last week that back-to-back unpopular decisions by the government within 45 days in office could cost them dearly in winning seats vacated even by the party.

They are reported to have told the prime minister that an average 35 per cent increase in natural gas rates had increased the costs of daily use items from flour to roti (bread) and cement even though the notification had not been issued yet. The ECC had approved up to 143pc increase for some higher categories of domestic consumers.

It was in this background that the minutes of the meeting that approved increase in gas rates and announced jointly by ministers for information and petroleum on Sept 17 were not delivered to the Oil & Gas Regulatory Authority until Monday (Oct 1) for notification. The sources said the government decision not to increase the prices of petroleum products was also mainly because of same reason.

The sources said the ECC would take up the power tariff rationalisation plan envisaging about Rs2 unit increase as it did many times before but would put on hold a final announcement to avoid an adverse impact on by-elections.

On the other hand, Ogra on Monday increased prices of indigenous Liquefied Petroleum Gas (LPG) 11.8Kg cylinder by about Rs60 (about 3.7pc) over the previous month. In a notification issued, Ogra fixed Rs1,673.24 for domestic cylinder effective Oct 2.

The producer price of LPG (propane 40pc and butane 60pc — two components of LPG) has fixed at Rs81,528 per tonne. This producers’ price included excise duty of Rs85 per tonne.

Marketing/distribution margin has been set at Rs35,000 per tonne or Rs413 per 11.8 kg cylinder, besides a petroleum levy of Rs4,669 per tonne or Rs55.09 for 11.8 kg cylinder.

In a recent meeting, the ECC had asked prime minister’s adviser on industries and production to review the whole subject of Shanghai-Abraaj Capital deal including receivables of the public sector entities like SSGCL and submit a report.

Shanghai Electric and Abraaj had entered into a $1.7bn deal on transfer of 66.44 per cent stake in K-Electric to the Chinese firm but faced troubles due to disputes over liabilities of the KE and related matters including a multi-year tariff. Shanghai Electric had promised about $9bn investment for system upgradation.

Published in Dawn, October 2nd, 2018