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According to a notification being issued within a week by the Ministry of Water and Power, it's envisaged that the electricity tariff for Karachi would be increased steeply, following the withdrawal of subsidy by the Federal Government. Tariff for domestic consumers using less than 50 units a month for sanctioned load of less than five kilowatt (generally known as lifeline consumers) would go up to INR 4 per unit from INR 2 per unit. For residential consumers using up to 100 units, the tariff has, however, been reduced by paisas 69 to INR 5.10 per unit and by 79 paisas to INR 8.11 per unit for those who fall under the slab of 101-200 units. The tariff for consumers using 201-300 units per month has been raised by INR 5.60 per unit from INR 8.11 to INR 13.71 per unit, showing an increase of 69 percent while for households using between 301-700 units, the rate has gone up by INR 3.29 per unit or 22 percent. For those consuming more than 700 units per month, the tariff has been jacked up by 21.4 percent to INR 18.29 from INR 15.07 per unit. Likewise, the peak rate has been increased by INR 3.22 per unit to INR 21.48 per unit. Beside these increases in tariff, Nepra has also reduced the slab benefit for consumers who would now be eligible for only one lower slab, unlike the previous exercise of the benefit of all previous slabs. Commercial tariff for less than 5kw load has also been raised from INR 18 to INR 18.29 per unit while for load above 5kw, it has been increased from INR 16 to INR 16.29 per unit. The rate for industrial consumers has been increased by a higher margin of INR 1.10 from INR 18 to INR 19.10 per unit.

It may be noted that National Electric Power Regulatory Authority (Nepra) had very sound reasons to jack up the power tariff for Karachi. The tariff for consumers of Karachi Electric was at present less than the uniform tariff for consumers for all other Discos and the decision has been taken keeping in view the amount of subsidy the Federal Government had earmarked for the consumers of Karachi Electric. As tariff determinations for K-Electric had been piling up for about six quarters due to legal and procedural difficulties, applicable tariff for domestic consumers was significantly lower in Karachi than other parts of the country. As a result of the present decision to raise the tariff in Karachi, electricity tariff would not only become uniform now across the country, but government subsidy would also be reduced by about INR 20 billion which would help narrow the overall budget deficit by a substantial margin.

While there is ample justification to raise the power tariff, its impact on the residents and industry of Karachi is obvious. Ordinary households would face more hardships as their electricity bills would increase significantly and the prices of various goods and services would also go up correspondingly. Cost of production of various industries would also increase, depending on the use of electricity as an input of production. This would make the goods produced in Karachi less competitive, both in the domestic and foreign markets. However, to make the move less painful for Karachiites, Karachi Electric could take certain steps to improve its service standards and reduce loadshedding to elicit necessary co-operation and soften the resistance from consumers against the decision. In this connection, it is of utmost importance to remove kundas and check other forms of theft of electricity to reduce line losses which are now hovering around 30 percent of the total electricity supply in the city. Sindh government should not only extend the needed assistance to this effort but should also clear its own unpaid bills to improve the financial position of K-Electric. Besides, it is crucial for the K-Electric to reduce its dependence on the national grid as soon as possible by producing more energy itself. This is particularly urgent because of the constant threats by Abid Sher Ali, Federal Minister of State to discontinue electricity supply to the city from the national grid on one pretext or the other. We are afraid that materialisation of his threat could turn large parts of the "city of lights" into darkness. Finally, a rise of 100 percent in tariff for lifeline consumers is against the past practice of sparing such consumers from the burden of hike in the rate. Many arguments can be advanced, for and against the new policy decision, but the government seems to be so much under financial stress at this juncture that harsh and unpopular measures have to be implemented to reduce the overall subsidy in the budget and meet the targets agreed with the IMF.

Source-On Request