Can't connect right now! retry

add The News to homescreen

tap to bring up your browser menu and select 'Add to homescreen' to pin the The News web app

Got it!

add The News to homescreen

tap to bring up your browser menu and select 'Add to homescreen' to pin the The News web app

Got it!
June 2, 2015

Govt extracting money from power consumers: LHC


June 2, 2015

The federal government has become unjustly wealthy by illegally extracting involuntary money from electricity consumers in the name of different surcharges. It has no role in determination of tariff which is the sole prerogative of National Electric Power Regulatory Authority (NEPRA), the court ruled.
Issuing a 39-pages detailed judgment on the issue of surcharges being collected from consumers, the court ruled tariff determination was the sole prerogative of the Nepra and the government could only request it for consideration. So, the Nepra is directed to work out the total amount of surcharges collected from the end consumers to date and evolve a plan for the repayment of the amount through adjustment in tariff for the benefit of the end consumer within three months.
“Surcharges are, therefore, at best an involuntary extraction of money from electricity consumers in the name of costs of the system.” A division bench comprising Justice Mansoor Ali Shah and Justice Ayesha A Malik had decided a few days ago hundreds of petitions challenging constitutionality and vires of section 31(5) of the Regulation of Generation Transmission and Distribution of Electric Power Act(RGTDEPA), 1997 and set aside the surcharges including Equalization Surcharge (“EQ Surcharge”) which was subsequently withdrawn on October 10, 2013, Debt Servicing Surcharge (DS Surcharge), Universal Obligation Fund Surcharge (UOF Surcharge) Neelum Jhelum Surcharge (NJ Surcharge) levied from time to time since 2008.
Interpreting section 31(4) of the Act, the court states that the federal government at best can request the Nepra to reconsider the tariff determined and no more. The actual determination of tariff lies exclusively with the Nepra. It means that if any party including the federal government desires any change or modification in the tariff, which can include reasons related to the prudency of costs, it will have to file a petition before the Nepra.”

specific role of the Nepra to determine tariff has a constitutional underpinning. Electricity is a basic utility and has a direct link with the livelihood and quality of life of the people. Tariff determination of this basic utility, therefore, assumes constitutional importance and touches upon the fundamental rights of the people. The legislative wisdom behind establishing an exclusive authority (Nepra) for determination of tariff structured on provincial representation meets the constitutional value of cooperative federalism.
The Apex Court had held that under section 31(5) the levy of tax was only permissible under the authority of an act of Parliament. This power of levying the tax cannot be delegated to the executive authority. “Section 31(5), therefore, suffers from excessive delegation and is therefore violative of Article 25 of the Constitution,” the court held.
In the present case, section 31(5) of the Act provides “Distribution company shall pay to the federal government such surcharge as the federal government, from time to time, notify in respect of each unit of electric power sold to the consumers.” This does not specify the design and nature of surcharge to be imposed on the sale of the electric power. It also fails to specify the number of surcharges permissible under the law. It simply opens an unguided window and empowers the executive to assume legislative responsibility, which offends separation of powers and falls within excessive delegation.
So, section 31(5) of the Act and the Surcharges namely; EQ Surcharge, DS Surcharge, UOF Surcharge and NJ Surcharge levied from time to time since 2008 through impugned Notifications are, therefore, declared as unconstitutional and hence set aside.
The federal government by charging unconstitutional and illegal surcharges from the consumers of electricity has been unjustly enriched. Therefore, the federal government is directed to refund the amount of surcharges illegally extracted from the consumers. The court explained the reasons of setting aside each surcharge separately.
DS Surcharge: Services the mark-up and late payment surcharge for the benefit of the government of Pakistan. When payments by Central Power Purchasing Agency (CPPA) are delayed to the IPPs, the IPPs charge mark-up pursuant to their power purchase agreements. This mark up is paid by the government through the levy of the DS Surcharge, which is collected from the consumer by the distribution companies and deposited with the National Transmission and Dispatch Company (NTDC) and finally paid to the IPPs by being routed through the CPPA. This stands established by the statement of the government that it has made payments of approximately Rs.146 billion as mark up to the IPPs. Admittedly this cost is not included in the tariff nor considered by the Nepra as a prudent cost.
Universal Obligation Fund Surcharge and the Equalization Surcharge: The federal government is to impose a tariff that is uniform on all consumers in all regions. Therefore, for a particular type of consumer(s), in order to ensure uniformity in the tariff, the federal government allows a subsidy by committing to make payment of the unpaid amount under the determined tariff. The federal government notifies Nepra’s approved tariff but instructs for a certain category of consumers to be charged less than that determined by Nepra. Consequently only a portion of the tariff determined by Nepra is paid by the consumer, and the difference (in the amount paid by the consumers and the tariff determined by Nepra) is paid by the federal government as a subsidy. The UOF Surcharge recovers for the federal government all amounts paid by it in the form of a subsidy. The respondents have justified these surcharges on the ground that even after its levy the federal government does not exceed the approved tariff determined by Nepra, hence nothing extra is being charged from the consumer.
In effect, the amount of subsidy, intended to politically project a people friendly image of the government, is immediately recovered, through financial gimmickry in the shape of Universal Obligation Fund Surcharge and the Equalization Surcharge which has no legs or legal justification to stand on.
As to the NJ Surcharge it has been imposed to meet the capital cost for the construction of the Neelum Jhelum Hydro Power Project. The surcharge collected from the consumers is paid to a company engaged in the construction and development of the project. It has no direct relation or nexus with the unit of electricity consumed. It is money collected for the purposes of construction and development of the Neelum Jhelum Dam which has yet to be completed. Again there is no original cost (regarding tariff) on the basis of which this cost has been added on as a surcharge.

Topstory minus plus

Opinion minus plus

Newspost minus plus

Editorial minus plus

National minus plus

World minus plus

Sports minus plus

Business minus plus

Karachi minus plus

Lahore minus plus

Islamabad minus plus

Peshawar minus plus