ISLAMABAD - Ministry of Water and Power on Thursday issued notification of imposing up to Rs4 per unit surcharge on the electricity tariff, depriving consumers of around Rs90 billion relief due to decrease in oil prices and line losses.

According to the notification, subsidy has been reduced up to Rs2.50 per unit and surcharges up to Rs 4 have been imposed on different categories of the electricity consumers.

On the request of CCPA, Nepra had reduced the electricity tariff for year 2014-15. The reduction was up to Rs. 4 per unit after reduction in oil prices. The benefit of reduction in line losses and theft was also provided to the users in that reduction. The objective of the reduction was to decrease the tariff and provide relief to general public.

In order to not pass on the benefit of reduction of oil prices and decrease in line losses to general public, on the request of government, Nepra allowed the imposition of these surcharges up to Rs. 4.

“Based on calculations on reduction in theft, technical losses and fall in fuel prices, during the said period, the tariff had to come down from Rs1 to Rs4 per unit for different consumer categories, but to absorb that reduction, government imposed new surcharge, Rs3 for domestic and Rs4 on commercial and industrial consumers,” an official said.

The distribution companies would deposit the amount collected under the equalization surcharge and tariff rationalization surcharge, in the account of Central Power Purchasing Agency account. This money generated through surcharges would be used to pay debts of power sector.

At a public hearing a few days ago, major power sector stakeholders had opposed the imposition of over Rs2.50 per unit surcharges on electricity tariff.

But despite the fact that new surchages were imposed under IMF directions, Ministry of Water and Power on Thursday claimed that the surcharges were actually aimed to provide relief to government.

“There is no additional burden or increase in tariff for the majority of consumers, falling in the categories between 1 to 300 units. Additionally, in the tariff category for consumers between 200 to 300 units, the tariff is even lower than the previous year,” said a handout from ministry of water and power on the subject.