Removing Impediments to Growth Coal RFO Gas(RLNG) June 2022 % Above Reference Price 187 153 216 Share in Electricity Generation(%) 13.6 10.0 24.4 i) The enormous hike in imported fuel prices as shown above has conveyed a very im­portant message. The time has come to invest more in domestic fuel supplies. This im­plies greater exploitation of Thar coal deposits and faster and bigger shift to solar and nuclear energy. Incremental capacity will need to be in these sources predominantly. ii) Quarterly tariff adjustments have been delayed by NEPRA. This is one factor which has contributed to the extraordinary hike in the FAC. Accordingly, the reference price for determining the FAC should be adjusted upwards in time. iii) The FAC has been fixed in absolute terms per kwh for consumers irrespective of size of electricity consumed. The domestic tariff is progressive in nature. As such, the FAC should be fixed at a percentage of the base tariff, so that larger consumers pay more in absolute terms. iv) The exploration of gas and other minerals has declined. The expenditure annually used to$1 billion or more over a decade ago has come down to less than$500 million, espe­cially by foreign exploration companies. This has been caused by negative perceptions about Reko Dik. Fortunately, this dispute has been resolved recently by the Supreme Court. Local and foreign investments must be deployed more for exploration of gas and oil in the country. v) The pricing of electricity is counter to the practice as shown below in other countries. The price for industrial consumers is relatively higher in Pakistan than in other coun­tries as compared to the price for domestic consumers. This implies that there is a case for raising the average consumer tariff and reducing it for industrial consumers, especially the exporters. Electricity Price(As of October 2022) Industry Bangladesh 8.5 India 10.0 Thailand 10.2 Philippines 11.3 Pakistan 16.3 (cents/kwh) Domestic 5.3 7.3 9.9 16.5 5.5 Ratio 1.60 1.37 1.03 0.68 2.96 181