ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) Thursday grilled Power Division for proposing plan to impose surcharge of Rs 3.23 per unit from November 2023 onward to cover power sector inefficiencies, misgovernance and without analysing its impact on the already dwindling industry.
The authority, comprising Chairman Tauseef H Farooqi, Member Sindh, Rafique Ahmad Shaikh, Member KP, Maqsood Anwar Khan, Member Balochistan, Mathar Niaz Rana and Member Punjab, Amina Ahmed raised a number of questions on justification of new proposal of surcharge at Rs 3.23 per unit, just days after approval of additional surcharge of Rs 3.39 per unit. The government is projecting revenue of Rs 335 billion from this surcharge.
Chairman Nepra, however, in a statement made it clear that the Authority has no power to stop surcharges of up to 10 percent of total revenue requirement of power sector.
Motion filed with Nepra: All set for Rs3.23/unit additional surcharge on electricity
The amount collected from surcharge will be used to pay interest on loans of Power Holding Company (PHL) and government liabilities toward IPPs and Chinese power projects. However, circular debt of Rs 2.6 trillion which, according to Chairman Nepra is a monster, will remain at the same level.
Of Rs 2.6 trillion, Rs 1.9 trillion are towards generators, Gencos payables to Gencos, Rs 100 billion Rs PHL and loans of Rs 765 billion backed by government guarantee. Power Division’s team led by joint Secretary (Power Finance) Mahfooz Ahmed Bhatti admitted that inefficiency and misgovernance are key reasons for the circular debt in addition to theft and under recovery. He said, Power Division has submitted IPPs payment plan to Finance Division.
Previously, Nepra had approved surcharge of Re 1 per unit from November 2023, in addition to existing surcharge of Paisa 43 per unit.
The Authority expressed its displeasure at frequent submission of surcharges on consumers who are already overburdened due to higher cost of electricity.
The chairman in his remarks said that those who are habitual in not paying their bills, will be laughing at the surcharges on those who are regularly paying bills.
He enquired if this surcharge would control the flow of circular debt only or reduce circular debt stock of Rs 2.6 trillion. A representative of CPPA-G, Naveed clarified that of Rs 335 billion, Rs 209 billion will be utilized to reduce circular debt flow. He said, Rs 400 billion of LPS will also be recovered through surcharge as this is not covered in working capital.
Last year, growth in circular debt flow was Rs 336 billion and estimates for current fiscal year are more or less the same.
Member KP asked what is the guarantee that Power Division will not come again for imposition of another surcharge to bridge its unmet requirements, and questioned as to how much surcharge will be imposed.
Chairman Nepra questioned why the government is in a hurry to bring the case of Rs 2.23 per unit new surcharge when its application will commence from November 2023; the Power Division did not give any clear answer.
On a question from Member Sindh, Rafique Shaikh why should consumers bear the burden of incompetence of electricity companies the Power Division representative said that the government is taking different measures to improve power sector including private sector participation, provincialisation of Discos and outsourcing recovery of high loss feeders.
Member Sindh maintained that if high loss feeders are outsourced, the stock of circular debt will reach Rs 3 trillion.
The Authority was informed that after imposition of surcharge of Rs 2.23 per unit, tariff of industry will reach Rs 38 per unit, in addition to taxes and other charges.
The Authority noted that with increase in tariff demand for electricity decreases and theft increases.
Chairman Nepra observed that the direction in which we are going, there will be no improvement in the power sector.
Member Balochistan Mathar Niaz Rana expressed his concern at the possible impact of surcharge on industry as LSM data has already showed negative growth.
“You don’t have any assessment on how the price hike will affect the industry,” he added.
Representative of Karachi Chamber of Commerce and Industry, Tanveer Barry said that the Chamber has rejected the proposed surcharge on electricity bill because there are inefficiencies of Discos that are to be paid by the consumers of Karachi and now demand will increase and imported fuel will be used in costliest plants.
He said, cumulative price of industrial tariff will reach Rs 50 per unit. He suggested that the Authority, comprising Chairman and Members should make their comments part of determinations so that people should know the Authority’s views.
Arif Bilwani, Imran Shahid, and Aneel Mumtaz also offered comments on the proposal.
Copyright Business Recorder, 2023
Comments
Comments are closed.