ISLAMABAD: In the wake of steep decline in the cost of electricity production and even after approval of the National Electric Power Regulatory Authority (Nepra), the state-owned electric power distribution companies (Discos) have not only refused to pass Rs224 billion relief on to consumers but also moved the Islamabad High Court (IHC) for a stay against the decision of the regulator.
Under the decision of Nepra, Discos were bound to pass relief of Rs1-3 per unit to electricity consumers, but Discos not only defied the decision but also managed a stay order from the IHC against it.
According to official documents available with The News, Discos refused to obey the decision as Nepra did not allow passing on the financial burden of less recovery of electricity bills, theft and inefficiency to the consumers who are paying the electricity bills regularly. After Nepra decision, Discos with the blessings of the Ministry of Water and Power first adopted the policy of delaying tactics for two months. But when no option was left with them, they moved the Islamabad High Court seeking a stay order. Under the decision, power consumers were to get benefit of Rs103 billion under the head of reduction in fuel cost of electricity generation and Rs125 billion under the heads of theft, losses and less recovery.
Currently, Discos are fleecing Rs17 billion additional from consumers every month. Nepra says that the decision was given in line with the verdict of Supreme Court under which the financial impact of electricity theft and inefficiencies prevailing in the distribution companies cannot be passed on to the consumers. They are paying their electricity bills regularly and they should not be punished for the crimes they did not commit, the apex court had ruled.
The Supreme Court’s decision clearly says that it is the responsibility of Discos to check electricity theft and lessen losses. Sources said the government plans to make the consumers also pay the circular debt, that has again reached Rs300 billion.
The official documents say, “Currently Discos are functioning in a monopolized environment and in case of default the connection of the premises, if disconnected, cannot be restored till the outstanding dues are paid and as per the referred Chapter of Consumer Service Manual, thus transferring the risk to the third party that is occupant of the premises.
Furthermore, the distribution company always has the option to recover the outstanding amount through sale of the property after following the due process of law. In addition to this, at the time of connection, Discos also collect one month's billing from the consumer in the shape of security deposits, which also serves as deterrence for a consumer.
About the argument that since presently the sector recoveries are in the range of 85-89% per annum, resulting in the shortfall on account of less payment to the power producers leading to circular debt situation, the Authority considers it a pure operational inefficiency on the part of Discos.
The documents say: “The Authority in Human Rights case No. 7734-G/2009 & 1003-G/2010 regarding Alleged Corruption in Rental Power Plants and case No 56712/2010 regarding fraud in payment of rental power plants, submitted before the Honourable Supreme Court of Pakistan that the tariff determined by the Authority is free of any inefficiencies and mismanagement on the part of Discos and the impact, thereof, is not passed on to the consumers through tariff.”
As regard the companies which operate in so-called hard areas, the Authority has already taken cognizant of the fact and allowed a margin of law in their T&D losses. However, Nepra clearly told Discos: "In terms of Constitution and Act, 1997, Nepra is mandated to safeguard the interests of the consumers but the officials concerned of Nepra failed to perform their duties diligently.”
The court, through its order, clarified that it is the federal government which needs to improve its affairs rather than asking Nepra to add the built-in inefficiencies of the system to tariff. The court, in fact, adjudged Nepra’s failure to protect the interest of the consumers; therefore, passing on inefficiencies of the Discos/ Government to the consumers would be in violation of the court orders.
The Supreme Court, in other Human Right cases No 14392/ 2013 & 790-G/2009, in the matter of unprecedented load-shedding and increase in electricity prices under para 36 (ii) decided as under:
"The competent authority shall take steps to control all kind of losses after supply of the generation like line losses, theft, etc, by using modern devices like introducing smart meters and supplying electricity only to the consumers, if need be, in advance or without any default after submission of the bills. As far as all kinds of unauthorised consumers are concerned, efforts should be made to persuade them to make payments of the bills, failing which action, as envisaged under the Electricity Act, 1910, the Electricity Rules, 1937 and Nepra Act, 1997 as well as other enabling laws/ rules, should be taken.
A policy has to be announced by the NTDC/ Discos under which this supply of electricity to the consumers to believe in law and make payments in time, if encouraged and supply of unauthorized consumers is discouraged."
It is evident from the aforementioned decision that supply of electricity to the paying consumers has been encouraged, meaning thereby that burden of non-paying consumers may not be passed on to the paying consumers rather the unauthorised consumers be discouraged.
Therefore, the request of federal government to allow any margin for non-recoveries in the tariff does not merit consideration and if allowed will be in violation of the SC orders.