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Govt Approves Further Electricity Surcharge To Comply IMF Requirement

Federal Govt approve Rs 3.82 Electricity Surcharge per unit for March.

The Economic Coordination Committee (ECC) of the Cabinet, which is led by Finance Minister Ishaq Dar, approved the implementation of an additional Electricity Surcharge of Rs. 3.39/unit for a period of four months.

To make up for the markup costs for PHL loans that are not already covered by the currently in effect FC surcharge @ 0.43 per unit, the ECC additionally approved an additional Rs. 1 per unit for FY 2023–2024 (making the total surcharge for FY24 Rs. 1.43/unit).

The Cabinet formally approved the decision on February 14, 2023, in Case No. 98/Rule-19/2023.

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The aforementioned surcharge of Rs. 1.43/unit is anticipated to generate Rs. 126 billion for the fiscal year 2023–2024, which is insufficient to cover the obligations of the power producers.

The Federal Government is fundamentally obligated to pay for energy services, and this liability is related to the sovereign guarantees.

Inability to pay electricity producers may cause a reduction in generation capacity, which may increase load shedding.

Furthermore, as a sovereign guarantee issued by the Government of Pakistan (GOP) protected the payments to the power producers, the latter must now begin relying on the sovereign guarantees and levying a late payment premium.

The federal government may impose surcharges on consumers up to 10% of the total revenue threshold for suppliers of all-electric power pursuant to Section 31(8) of the Regulation of Generation, Transmission, and Distribution of Electric Power Act of 1997 (the Act), in order to meet any financial obligations the government may have with respect to the provision of electric power services.

As a result, it is suggested that the surcharge amount be increased to Rs. 335 billion (instead of the Rs. 126 billion originally approved) for the FY 2023–24 and subsequent years for the aforementioned consumer groups until the Federal Government commitments are eliminated.

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