Charter of the Economy Removing Cascading of Tariffs There is a substantial cascading on tariffs by the levy of charges unrelated to power generation and the sales tax. On a typical bill, the cascading could be as much as 5 percent or more. These levies include the TV Fee, E-Duty, Neelum–Jhelum surcharge, etc. They should be excluded from the billing. Instead, the Income Support Levy could be reintroduced in the personal income tax and revenue earmarked as required. Policy on Power Tariffs Pakistan has relatively low domestic electricity tariffs compared to industrial tariffs. In future tariff increases, the policy ought to be of increasing the tariff more for domestic consumers with monthly billing of above 500 Kwh. This will impact only the top two quintiles of households. Further, the tariff increase should be relatively large for big industrial consumers, in the category above 5 KW and commercial consumers. It should be significantly less for small industrial consumers. Also, the increase should be minimal for agricultural consumers and for small domestic consumers. Change in Intra-Sectoral Development Priorities Table 23.12: Share of NTDC and Pepco in Federal PSDP Allocation 2018-19 63.8 2019-20 33.6 2020-21 39.6 2021-22 69.5 Source: NEPRA State of Industry Report (Rs in Billion) Share of PSDP(%) 6.4 5.0 6.1 7.7 There has been an overemphasis on investment in mostly new thermal generation capacity and much less priority given to the improvement and expansion of the transmission and distribution system. This is reflected in the low share in PSDP allocations to NTDC/PEPCOs, as shown in Table 23.12. The share has remained low at below 7 percent. However, in the latest PSDP for 2021-22 there is an increase in allocation of 76 percent. It is essential that all on-going projects are implemented on a priority basis. There is need to ensure that in future at least 10 percent of the annual PSDP is allocated to transmission and distribution projects and the funds allocated are fully used. 228