EDITORIAL: Once again the incompetence, inefficiency, and perhaps corruption in the working of Discos (distribution companies) has been laid bare, forcing Nepra (National Electric Power Regulatory Authority) to announce its intention to hold them accountable for gross overbilling in July and August last year.
During a public hearing, the regulator also expressed serious concerns about Discos demanding an additional Rs85 billion in capacity charges from consumers over three months, even as applications for new connections that would utilise about 1,100MW still remain unaddressed; and failure to address them remains unexplained.
Yet even as the session at that time was called to discuss this demand, which would mean a national rate increase of approximately Rs4.5 per unit for a quarter, it’s not really surprising that executives of power companies, including the CPPA (Central Power Purchasing Agency) CEO, came completely unprepared and could not provide satisfactory answers to questions from Nepra members. And Nepra’s chairman was justifiably disappointed because not only were questions raised in the hearing not properly answered, but CEOs of power companies were unavailable even though the regulator facilitated them through an online public hearing.
Now, since responses of Discos regarding overbilling did not provide necessary details – including overcharging consumers to the tune of 100 percent in Jul-Aug — Nepra has decided to issue show-cause notices “within a couple of days” and vowed to conclude this matter within a month.
CEOs of power companies have also been directed to ensure personal and physical presence at the next hearing, and in case they are otherwise occupied, they must make sure that the alternate staff is adequately prepared.
One had hoped that Discos will finally appreciate the urgency of the moment and play ball with the regulator. The paralysis in their working, stemming primarily from the unprofessional attitude of their senior management, has hurt the power system and especially consumers for far too long.
They cannot expect to simply pile all the burden onto consumers and get away with it. It was August electricity bills that caused unprecedented uproar, after all, with consumers unable to pay them blocking roads and protesting up and down the country.
To pile further misery on them and choose not to explain the reasons for it is unacceptable, especially when there’s rampant load-shedding across the country, consumers are made to bear the heavy cost of capacity payments, and power companies are not showing any interest in extending new connections.
However, it is most disconcerting to learn that Nepra has taken a summersault on this issue and has now decided not to issue show-cause notices for overbilling to the Discos, even though in certain cases this overbilling exceeded 100 percent. Instead the regulator has decided to issue a directive to the Discos to rectify/address all the discrepancies within a month/billing cycle and submit compliance report within 30 days.
As the power sector regulator, it is Nepra’s responsibility to sort out this mess. It will have to take all measures necessary to ensure compliance from Discos. In the event Discos continue with their usual delaying tactics the regulator should not hesitate to invoke harsher measures within it powers to ensure compliance.
Needless to say, the power sector is going to stay in the spotlight for a considerable time to come, especially when it’s time to negotiate the next bailout programme with the IMF, most probably another EFF (Extended Fund Facility), in a couple of months. All outstanding issues should be settled before then.
Concluding, it is heartening to note that Nepra, through its Performance Evaluation Report (PER) 2023, has proposed some key or significant changes in Discos to improve their performance as low recovery, according to a Business Recorder report carried by the newspaper in its yesterday’s issue, “has inflicted a Rs 268 billion loss on the national exchequer in 2023”.
No doubt, Discos are required to realise the objective of maximum collection at all cost in order to maintain or boost their financial health. Agreed, eliminating theft and line losses along with ensuring maximum recovery is perhaps the only way towards reducing circular debt in a meaningful manner. But this objective must not be achieved through overbilling or excessive billing by putting consumers under unacceptable pressure or duress.
Copyright Business Recorder, 2024
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