Donors oppose govt’s move to clip Nepra powers

ISLAMABAD:  Though donors have agreed to impose surcharge on electricity bills to do away with circular debt, they have opposed the government’s move to hurt the independence of Nepra, a senior official told The News.

“And to this effect, donors have withheld financial credit line of $300 million asking the government to keep away from clipping the power of the Nepra, knowing the fact that through the Council of Common Interests (CCI), the government has erased powers of the regulator with regard to issuing licences to more players in power sector.

“Right now the electricity consumers are paying the surcharge of Rs1.43 per unit with no legal back-up to contain the circular debt, which currently stood at over Rs451 billion,” he said.

Donors have managed the government to make the imposition of surcharge a part of the amended Nepra Act draft which will be passed by parliament after Eidul Fitr. “And now there will be no fear that the surcharge will be erased in case it is challenged in court of law,” says the official while quoting the written argument of donors.

The final draft of the Nepra Act, whose copy is available with The News, unfolds that 31A in Act of Nepra 1997 deals with the surcharges saying: “The government may, in addition to the tariff determined by the Authority, impose a surcharge on such consumer categories as may be notified in the official gazette. Apart from it, surcharge can be imposed after getting determined under National Electricity Plan for other purposes that include for raising funds for future development plan in power sector, environmental protection, energy efficiency, demand management, managing climate and promoting the security of energy supply. Surcharges will also be imposed to give effect to any tariff rationalisation or subsidy management guidelines as may be issued by the federal government from time to time.”

As far as the government’s final draft laid down in parliament is concerned, the official said, as soon as parliament approves it, the first casualty will be the whole Authority of the regulators that consists of four members and one chairman as the age limit for the said posts has been reduced by 10 years.

After parliament approves the amended Nepra Act, the regulator will have no role in determining the tariffs as it will be bound to comply with the National Electricity Policy and Plan that will in future the determine the tariffs. Once the amended Nepra Act gets approved, National Electricity Policy and Plan will be made by the government that will regulate the regulator.

The government is adamant to keep the regulators under administrative control of the respective line ministries under the notification issued on June 06, 2017 and to this effect the Cabinet Division has notified on June 12 the amended rules of business to deal with the regulators.

Independent experts are surprised over the new move of the government as earlier the same decision taken on December 19, 2016 was suspended by the three courts saying it was beyond their comprehension that why the government was fond of placing the regulators under the lines ministries as only one year is left of the government rule. The government spent four years with the existing regulatory regime but in its last year, it is adamant to make regulators spineless. The official source said that  the ministries of water and power and petroleum had been regularly complaining to the prime minister about these regulators.

It was particularly pointed out that without changing the regulatory environment, the Nandipur power project and Sahiwal coal-fired project would never become economically viable and the regulators would not allow higher system losses in electricity and gas distribution to be passed on to the consumers. Likewise, major energy projects would continue to face challenges, putting into question the government’s commitment of ending energy shortfall by 2018, it was feared.

Therefore, the subject of transfer of administrative control of the regulators was first put on the agenda of the Dec 15 meeting of the Council of Common Interests (CCI) but was opposed in writing by the Khyber Pakhtunkhwa chief minister who said the critical matter of public importance, having far-reaching consequences for his province, should not be decided upon in haste and should be withdrawn from the agenda.