Adjustments in tariff: Rs 600 billion passed on to consumers: Nepra

National Electric Power Regulatory Authority (Nepra) on Tuesday acknowledged that around Rs 600 billion has been passed on to the consumers through different adjustments in tariff which is nearly 86 percent of the 2019-20 Public Sector Development Program (PSDP).

This observation came at a public hearing held to consider increase in tariff by Rs 0.99 per unit under monthly fuel price adjustment formula for November 2019, which has put an increase in electricity tariff on "ice" for sometime due to political pressure and current socio economic situation of the country.

Chairman Nepra inquired if there is any counter mechanism for not passing on the proposed increase. One of the participants argued that the situation would be different if the Authority believes that what is proposed by CPPA-G is fair and Discos have achieved the targets of recovery and losses.

However, when it was stated that there is an impression in Islamabad that the Authority is getting dictation from other government quarters, Chairman categorically refuted the impression, "no at all. I assure you that this will be the last thing I will accept. We are doing our work professionally and honestly."

Chairman Nepra said that companies are being strictly monitored in line with targets assigned to them but at the same time the regulator does not want anybody to have a heart attack. However, Chairman maintained that some decisions cannot be taken at a junior level.

"We are also very much concerned about the current status of power sector and are trying to rectify things," he maintained. Member (Tariff) confirmed that the impact of tariff adjustments for the last one year is around Rs 500-600 billion, however, he said, it is a prudent cost which is to be passed on to the consumers.

The impression of freezing tariff was witnessed at a public hearing when the Chief Finance Officer (CFO), Central Power Purchasing Agency-Guaranteed (CPPA-G), Rihan Akhtar stated that CPPA-G does not want hearing of Fuel Price Adjustment (FCA) for November 2019 as the government is in the process of reviewing the monthly fuel price adjustment formula. He requested the Authority headed by Chairman Nepra, Tauseef H Siddiqui, Saif Ullah Chatha(Member Punjab), Engineer Bahadar Shah (Member KP), Rehmat Ullah Baloch (Member Balochistan) and Rafique Ahmed Shaikh to defer the proceedings.

As the hearing started, Nepra Member (Tariff), Saif Ullah Chatha asked the CFO CPPA-G to offer his comments, which was contrary to past practices. Usually, Nepra asks its technical team to present the case after which CPPA-G, NPCC or NTDC are invited for comments. The new tradition was clear proof that Nepra had already been conveyed that hearing should not be conducted. However, for face saving the "phony" proceeding was conducted. When this correspondent commented to Chairman Nepra that it appears that the regulator has become a rubber stamp, he replied that when the petitioner requests for withdrawal of tariff petition then what can the regular do.

CFO, CPPA-G informed the authority that CPPA-G is suggesting sectoral level changes in FPA mechanism and formalities in this regard are being finalised. He, however, did not give any timeframe for the finalization of changes in FPA mechanism.

"It is our request that the hearing of FPA for November 2019 should be postponed for some days and as these changes are finalised, revised data will be resubmitted to the Nepra for consideration," he added.

On January 20, 2020, Prime Minister Imran Khan snubbed Ministry of Energy - Petroleum Division and Power Division - to pass on all efficiencies of power and gas sectors to the end consumers. When CFO CPPA-G was asked whether deferment is being sought after the Prime Minister's criticism of the performance of the Ministry of Energy, he replied that problems in the power sector are in everyone's knowledge.

In reply to another question, he said that fuel price adjustment is a mechanism and in fixing it neither Nepra nor CPPA-G can place any undue burden on consumers. He said, FPA is changed due to change in reference price and basket price in a transparent manner.

Chairman Nepra, however, argued that when FPA is determined, if it's impact is less than the previous month it should inform the public that their bills will be less; media portrays it in a way that new increase is passed on to the consumers, he added.

"I don't know if this is done to sensationalize things or not but to highlight the discount in a specific month. Play your role in not portraying Nepra and CPPA-A as cruel organizations.

Neither Nepra nor CPPA-G control fuel prices," he added. However, when Chairman Nepra was asked what action has been taken for violation of economic merit order, he replied that Nepra blocked Rs 7 billion one month because CPPA-G operated furnace oil plant without prior approval of Nepra. In response to another question, he said that he cannot comment on changes in FPA mechanism as these are not submitted to the regulator. When this will come to Nepra, no one will challenge the powers/rights of Nepra.

"It is our responsibility to safeguard the rights of consumers," he continued. There are unconfirmed reports that the government wants to freeze the current power tariff for the next 18 months and for this purpose, Power Division has taken the IMF on board.