Energy prices to rise until year-end, ministers warn

The government on Friday said the energy prices will keep increasing for the next three to four months because of ‘landmines laid by Imran Khan’ and then start a downward trend in November–December this year.

Speaking at separate news conferences here, energy ministers – Khurram Dastgir and Musadik Malik – on Friday said the previous government had tied their hands with legal compulsions for price and there was no way out of the quagmire to provide upfront relief to the people before the completion of corrective reforms.

Both ministers said the PTI government kept delaying price adjustments for electricity and natural gas these became due after tariff determinations from the regulators and changed laws before leaving to ensure the new government was left with no choice but to clear the backlog.

Also, they did not arrange LNG, coal and furnace oil imports when their prices were at their lowest and the international lenders like the World Bank and IMF were providing cheaper and unconditional loans to sustain Covid shock. Not only these fuel prices had increased by 300 to 400pc by the time the new government came in, but these commodities were unavailable in the market at any price. “They (PTI) laid traps for us”, said Mr Malik.

He said the Oil & Gas Regulatory Authority (Ogra) was regularly coming with its determinations for gas price hikes but the PTI government did not notify it for more than three years. But at the last leg of its period, it changed the law under which a coming government could not hold on to Ogra’s determination that automatically stand notified after 40 days. “They enjoyed legal powers to decide about gas prices but withdrew these powers from the purview of subsequent governments to do so. This was another trap”, he said.

In the meanwhile, a yet-to-be-constituted commission would investigate why the situation reached this stage and what steps should be put in place so that such devastation was not repeated in the future. Also, the government would come up with schemes over the next couple of months to ensure maximum utilisation of solar energy to the extent of 5,000-6,000mw in the residential sector and provide relief to the people.

Read: Past energy decisions haunting the future

Power Minister Khurram Dastigir Khan said the power tariff rebasing was last done 17 months ago. During this period the inflation rate increased manifold but its impact was not reflected in base tariff. He said an investigation commission would examine how pressure was put on the regulator that quarterly tariff adjustments were delayed for so long which has now accumulated to be Rs7.90 per unit increase.

Mr Khan said his ministry had asked the federal cabinet to pass it on to the consumers in three installments between now and October this year. The cabinet has not yet taken a final decision as it also has to approve a part of the subsidy to protect the consumers in the lowest slabs. “This (increase in tariff) will be done in the next three months. It is expected the power tariff would then start declining in November-December”, he said.

The power minister said the country’s power demand had gone beyond 30,000MW on Thursday against a power supply of about 21,842MW while economically manageable capacity was no more than 25,000MW. He said the distribution companies faced about 6,000MW a shortfall on Thursday.

He said despite unavoidable loadshedding to domestic consumers, consistent and uninterrupted electricity was being supplied to the industrial sector to protect the employment of thousands of Pakistanis. He said the shortage was because of three factors including Imran’s enmity towards CPEC, misuse of NAB, unprecedented heat wave in April and unabated fuel (coal, gas and oil) prices hike in the international market.

He said power demand witnessed 30pc increase as compared to last year during the said period despite increasing 20pc generation this year.

Musadik Malik said the government would soon offer attractive incentives and a working environment to local and international companies to exploit indigenous hydrocarbon resources and move towards self-reliance in the energy sector because output was on a decline by 10pc annually and required new and cheaper technologies to upscale tight gas.

“We will not allow a monopoly to a couple of faces in every field and instead create competition for LNG terminals and private import and sale of LNG by improving incentives and ease of doing business”, he said.

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