'Nepra equally responsible for mismanagement in power sector'

The National Electric Power Regulatory Authority (Nepra) is equally responsible for mismanagement and bad governance in the power sector and cannot shift the entire blame on the distribution companies (DISCOs)/power division as it has been allowing justified/unjustified periodic adjustments in the power tariff.

So much so, Himayat Ullah Khan, a former Member Nepra from Khyber Pakhtunkhwa, had remarked in September/October 2017 that the decision of Nepra through a dissenting note that "it is my contention that write-offs (of the default recoveries of DISCOs) on a provisional basis will further facilitate/reinforce the rampant inefficiencies within the system, and put an upfront burden on the consumers," a copy of which is available with the Business Recorder.

In its State of Industry Report 2019, the Nepra has expressed serious concerns over the deteriorating performance of DISCOs and governance. It contended that fundamental principles of reforms followed in many countries have brought transparency, quality, competition, and lowering of electricity prices.

It has blamed the ministry for tinkering with tariff determinations which was the sole domain of Nepra and it is against transparency and reversing the established regulatory regime. The Nepra has pleaded that if the reform agenda is not followed in letter and spirit the power sector will go to the dogs.

According to the Pakistan Electric Power Company (Pepco) sources, the Nepra compromises once the pressure is exerted on it from the government quarters. They quoted the example of determining the power tariff in March/April 2016 by Nepra both on the multi-year (for LESCO, FESCO and IESCO from 2015-16 to 2019-20) and annual (for the remaining seven DISCOs for 2015-16) basis.

Initially, Nepra had determined a reduced tariff of Rs13.85/kWh (for peak hours) and Rs6.85kWh (for off-peak hours) for DISCOs. It was followed by the filing of 'review petitions' by DISCOs and a 'reconsideration request' by the government of Pakistan, which were all dismissed by Nepra in April-June 2016.

The DISCOs approached the Islamabad High Court and got a stay order and DISCOs continued charging higher tariff of Rs15/kWh (for peak hours) and Rs9.10/kWh (for off-peak hours) during the period of the stay order, which was already notified in 2015. In the meantime, the Islamabad High Court had ordered for rehearing of the petitions of DISCOs.

Accordingly, the Nepra held rehearing of the already rejected tariff petitions in September 2017 on the same old parameters and increased the tariff to Rs14.87/kWh (for peak hours) and Rs8.37/kWh (for off-peak hours), as the then federal government had already manoeuvred Nepra.

Not only this, said sources, the Nepra further took a suo motu notice in October 2017 for the first time in its history and further increased the tariff to Rs16.04/kWh (for peak) and Rs9.54/kWh (for off-peak hours) under the head of "periodic adjustment".

Interestingly, the sources said the government did not notify this tariff despite a requirement of the NEPRA Act that a tariff, once determined, should be notified within 15 days of its receipt by the government.

Instead, the government filed another request in March 2018, seeking a further increase in tariff to Rs18.67/kWh (for peak hours) and Rs9.17/kWh (for off-peak hours) under the unjustified additional surcharges like Tariff rationalisation surcharge, financing cost surcharge and Neelum Jhelum Surcharge etc.

The NEPRA approved it on 21 March 2018 after holding a hearing on 13 March 2018 and the federal government notified it on 22 March 2018.