Govt to face Rs1b daily loss as Nepra becomes dysfunctional

November 20,2018

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ISLAMABAD: Pakistan’s power sector has virtually been left in the lurch with monster of current circular debt at Rs1.5 trillion and will continue to sustain Rs1 billion loss a day as National Electric Power Regulatory Authority (Nepra) is going to be dysfunctional from today (Tuesday) as Authority has no more the 3-member quorum in place.

The tenure of Nepra chairman Brig (R) Tariq Saddozai is going to be over today (Tuesday) and the power regulator will have only 2 members in place including Punjab Member Saifullah Chattha, and Balochistan member Rehmatullah Baloch. However, the Nepra has no members from KP and Sindh since long. The law says that three members can complete the quorum and after the retirement of Mr Saddozai, the quorum is no more there and Nepra has practically become dysfunctional.

Unless and until the quorum gets completed, the government of Pakistan will continue to brave the Rs1 billion loss a day as the increase in power tariff by Rs1.60 per unit will not be notified. The government has under amended Nepra Act now approached the regulator seeking uniform tariff of all Discos based on the consolidated accounts and to this effect the authority had fixed November 26 for hearing. Earlier the regulator used to announce the differential tariff, but with amended act in place, the uniform tariff will be determined by regulator from now onward.

Nepra official says that the government has the option to extend the tenure of Nepra chairman and to this effect a summary was sent by government to cabinet division but could not be marketed for consideration before the Prime Minister Imran Khan because of his recent hectic schedule and prime minister is now scheduled to leave for Malaysia today (November 20), so the quorum of the authority will be no more in place from today (Tuesday), but the hectic efforts are still underway to get the nod of the premier for extension.

In case of no required action, the most important hearing on the government petition seeking uniform tariff will not be held on November 26 and because of this very fact, the government will brave mammoth loss of Rs1 billion a day. More importantly, Nepra will not be able to announce the monthly fuel adjustments and hold hearings on daily matters ranging from giving the licences to the companies to give tariff determinations. This will put the whole power sector at stands still.

With this appalling state of affairs in the regulator, the condition of power sector will further deteriorate as the payables of the power sector currently stand at Rs696 billion and the loans and liabilities of power sector borrowed by Power Holding Company Limited (PHCL) stand at Rs535 billion. However, the receivables of the power sector have increased to Rs898 billion.

According to the circular debt capping plan earlier agreed with IMF in September 2015, Pakistan has already defaulted the IMF targets set for three years from 2015 to 2018. As per target set with Fund in 2015, the government was to scale down the payables to Rs212 billion, which has now increased to Rs696 billion.


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