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Prime Minister Shehbaz Sharif said on Monday that the increase in the power tariff would not affect those using up to 200 units per month.
He made the remarks while addressing a ceremony in Lahore during which Pakistan LNG Limited and Azeri company Socar signed a framework agreement for liquefied natural gas (LNG).
Last week, the federal cabinet had approved the power regulator’s request to increase the national average tariff, which will see some residential consumers paying up to Rs7.50 more per unit.
The cabinet had approved the hike through a summary and the decision was conveyed to the National Electric Power Regulatory Authority (Nepra) on Saturday. Nepra had set a public hearing for today to fulfil the formalities before implementing the hike, which will retrospectively take effect from July 1 and will apply to all power distribution companies (Discos) and the Karachi-based private utility K-Electric.
Earlier this month, the power regulator raised the national average tariff by around Rs5 per unit (equal to one kilowatt-hour, or kWh) to ensure Rs3.28 trillion in funds to the loss-making power distribution companies during the current fiscal year.
Addressing the ceremony, the premier said that there had been some debate over the decision to raise the power tariff, noting that this was one of the conditions of the agreement with the International Monetary Fund (IMF).
“We had to increase it because of IMF agreement but I strictly said that I will not let the increase in the prices burden the poor,” he said, adding that this was also discussed with several ministries.
“The increase will not impact 63 per cent of domestic consumers which come under lifeline consumers and protected segments,” he said. “There has been no increase [in the power tariff] for those using up to 200 units, which is 63pc of domestic consumers.”
Shehbaz also said that a “partial subsidy” was being given to those using up to 300 units per month which comprised 31pc of total domestic consumers.
Talking about the LNG deal, the premier said that the two “brotherly countries” had just signed an agreement for the procurement of LNG from Socar.
“This agreement has a life of one year, which will be extendable to one more year,” he said. He said that under the agreement, Socar would offer Pakistan an LNG cargo each month. He said that Pakistan would be able to decide whether or not it will buy the cargo.
“If we buy it then well and good but if we don’t then there won’t be any burden or penalty on us,” he said, adding that Pakistan would have “freedom” in buying the cargo.
The prime minister further said that he was grateful to his “very dear brother”, Azerbaijan President Ilham Aliyev. He noted that he had visited Aliyev a few weeks ago and was given an “exceptionally warm welcome” by the president, his government and his team.
PM Shehbaz said that the two sides had “extremely productive and fruitful discussions” on how to promote economic relations between the two countries.
“Immediately, on my return to Pakistan, we have given approval to [an] Azeri airline to land at Islamabad, Lahore and Karachi. This is a big step to promote tourism, investment and exchange of delegations between the two countries.”
Under the framework agreement, Socar has offered LNG supply to Pakistan in the form of one cargo per month on flexible terms and with credit lines for 30 days after delivery of the cargo.