Friday March 01, 2024

Nepra objects to govt request for additional surcharge

March 17, 2023

ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) Thursday reviewed the federal government’s request for an increase in power surcharge for the upcoming fiscal year and termed it unfair.

The Authority believes that the increase would put the burden of multi-billion rupees of power sector inefficiencies and theft on loyal consumers, which was not considered just or reasonable.

Already, the Authority has allowed the federal government to recover Rs1.43/unit as surcharge in the next financial year 2023-24. Now again, it has been asked for an additional Rs1.80/unit to take it to Rs3.23/unit in FY2023-24.

The government said the earlier Rs1.43/unit was insufficient to meet the requirements to pay for retiring circular debt. Power theft and inefficiencies of state-run distribution companies (Discos) were one of the major reasons for the ballooning circular debt.

The government has not taken sufficient steps to end these inefficiencies or control power theft and now wants to shift its burden onto power consumers through increased per-unit surcharges.

The increase in the surcharge rate will result in passing the burden of Rs335 billion on to the consumers across the country.

On Thursday, the power regulator held public hearings to consider a petition filed by the federal government that asked for an increase in the rate of power surcharge.

Member Nepra, Khyber Pakhtunkhwa, Maqsood Anwar, questioned how far this matter will go, as the government will again and again submit more applications to raise surcharges.

Chairman Nepra Tauseef H. Farooqi chaired the proceedings.

Chairman Nepra asked why it was so early for the next year’s power surcharge. He pleaded with the federal government representatives to let the people breathe a sigh of relief.

It is not Nepra’s job to impose this surcharge, Chairman Nepra said, adding that imposition of power surcharge will not resolve the issue of circular debt anymore. Why should people be punished for the poor performance of discos?

Member Sindh Rafiq Shaikh questioned and lashed out at the power ministry officials for requesting a further increase in power surcharges. He called for resolving the problems of electricity companies. “We are also here to protect the rights of the users,” he added.

Member Balochistan Muthar Niaz Rana also expressed concern over the poor performance of power distribution companies and called for addressing the governance issues within the companies. “There is a lot of criticism on us. What confidence should we give to the customers? When will the situation be fixed?” asked Member Balochistan.

Member Punjab Nepra asked the Power Division officials not to mislead them regarding the imposition of surcharge.

An official of the Power Division said circular debt stood at Rs2,600 billion which included payments to IPPs and Power Holding Company’s ‘debt’.

Tanveer Bari, a representative of the Karachi Chamber of Commerce and Industry (KCCI) said in the current situation, the tariff of the industrial sector will reach Rs50 per unit, and said that KCCI rejects the request for a surcharge increase.

Nepra will issue its decision in the coming few days after reviewing the data.

The Power Division officials said the government was facing problems in paying off dues to the Chinese coal-fired power plants. They said the Power Division had submitted a payment plan for IPPs to the Finance Division.

According to the petition, the federal government has requested that the already approved surcharges of Rs1.43 per unit were not enough to meet the electric services obligations of the Government. It is worth mentioning here that the National Electric Power Regulatory Authority has already allowed the Federal Government to impose an additional surcharge of Rs3.39 per unit and Rs1.0 per unit from Mar-Jun 2023 and Jul 2023 to June 2024, respectively, with a cumulative impact of Rs149 billion on power consumers.

With the application of an additional Rs3.39 per unit, the total surcharge becomes Rs3.82 per unit for the four months of 2022-23, having an impact of Rs75 billion.

For FY 2023-24, the additional surcharge of Rs3.39 per unit will be reduced to Rs1 per unit to cover the additional markup charges of PHL loans not covered through the already applicable FC surcharge of 0.43 per unit.

The total surcharge becomes Rs1.43 per unit for FY 2023-24, having an impact of Rs74 billion.

In view thereof, the Authority has decided to allow the application of the surcharge to be recovered from different categories of consumers of K-Electric, for the period from March to June 2023 and for FY 2023-24, to cover the markup charges of PHL loans.

The Power Division said that the additional surcharge was intended to cover the markup charges of PHL loans not covered through the already applicable FC surcharge of Rs0.43/unit.