'At source deduction' of electricity duty: NWFP government 'condemns' Pepco for illegal act

The north-west Frontier Province (NWFP) government has condemned Pakistan Electric Power Company (Pepco) for at source deduction of electricity duty, official sources told Business Recorder.
'Condemnation' is a word rarely used in official communication and this is perhaps one of the few times a provincial government used the word 'condemn' against a federal government organisation for an action which, according to the former, is illegal.
According to Rules, electricity duty is collected by the power distribution companies (discos), and Peshawar Electric Supply Company (Pesco) is also responsible for collecting duty as part of each power bill, originally payable to the provinces. Receipts under this head are accumulated by Pepco which serves as an umbrella for the distribution companies and are transferred to the provinces. A levy is collected by the discos on each power bill that is payable to the provinces after deducting three percent as service charges.
Khalid Hussain Gilani, Secretary to NWFP government, in a letter to the federal government, a copy of which has also been dispatched to different federal provincial departments, accused Pepco of violating the constitution, relevant laws and decision of inter-provincial co-ordination committee by not reimbursing duty collected in the monthly electricity bills to the province.
As per section 118 (2) of the 1973 Constitution of Electric Duty Rules 1964, Pepco is barred from at source deduction against the provincial government receipts. As per the Electricity Act, 1910, Pepco is bound to transfer these receipts, collected under this levy, to the provinces within 60 days of collection. But usually it takes one year to clear this liability and, often, Pepco makes at source deduction to adjust its arrears, in violation of the law.
Similarly, IPCC in a meeting held on October 23, 2007 had agreed that the NWFP government should be given a credit of Rs 700 million on account of excess, wrong and fictitious billings. However, instead of giving the agreed credit, Pepco adjusted Rs 491.149 million in June 2008 and Rs 259.509 million in June 2009. According to the Provincial Secretary, Energy and Power Department, NWFP, Pepco deducted at source over Rs 259 million from the provincial government's receipts on account of electricity duty to adjust arrears outstanding against official connections.
"The arrears of Pesco were fictitious and mostly came from excessive and 'irrelevant' billing and the same needs to be reconciled with the Electric Inspector and Project Director, Energy Monitoring Cell," Gilani added. As per West Pakistan Act 1964, a penalty equal to the amount of electricity duty adjusted, was also leviable if payment was not made to the provincial government within the prescribed period of 60 days of the month of collection.
"The issue of at source deduction was discussed in the meeting with Chief Minister, NWFP, wherein the shortfall in revenue was thoroughly discussed and the action of Pepco of at source deduction was strongly condemned," said Provincial Secretary in the letter.
According to the Secretary, he was directed to approach the federal government for stopping this illegal action. Sources said the provincial government has requested the federal government to direct Pepco to refund Rs 750.658 million adjusted in June 2008 and June 2009 and refrain from further deduction at source of amount of electricity duty in future.