Rs25bn recoveries from trade groups: CPPA-G rejects changes to Nepra determinations

ISLAMABAD: The Central Power Purchasing Agency–Guaranteed (CPPA-G) has opposed any change in determinations of NEPRA involving Rs 25 billion due to be recovered from different industrial groups which challenged determinations on the plea that data provided by CPPA-G and NPCC was unauthentic.

This was the crux of a public hearing in NEPRA on Tuesday, which was attended by the legal counsels of different groups and few individuals who also accused NEPRA for siding with CPPA-G and NPCC.

The Authority explained the mechanism for determinations of FCAs and QTAs and offered legal counsels a consultative session to explain the entire procedure so that they can improve their professional expertise. Some of the legal counsels appreciated the Authority for this offer and showed interest in attending any such briefing, however a few did not support the idea.

Disco consumers: NTDC seeks Nepra’s help to recover Rs41.5bn

The issue of industrial higher tariff, IPP’s exorbitant profits, heat rates, fuel efficiency, balance sheets and lack of NEPRA interest in investigating alleged wrong doings of IPPs also came under heated discussion. They demanded third party audit of the data of IPPs as consumers are overburdened due to connivance of CPPA-G and NPCC officials.

Most of the legal counsels were of the view that NEPRA did not hold meaningful hearings on FCAs and QTAs which is why undue financial impact had been passed on to their clients and consumers. It was proposed that NEPRA should formulate Terms of Reference (ToRs) for meaningful hearings and identify the limit to which the counsels can raise questions or challenge the data. It was also mentioned that Economic Merit Order (EMO) had been violated, which affected consumers financially.

The audience also witnessed a tussle between Member Law (NEPRA), Amina Ahmed and legal counsel Flying Board and Papers as the latter tried to speak during the public hearing with, at one stage, Member Law terming the language of legal counsel “obnoxious”. Rafique Ahmad Shaikh (Member Technical) also argued with another legal counsel and dismissed his arguments as ill-informed.

On a question of Member KP, Maqsood Anwar Khan, CEO, CPPA-G Rihan Akhtar informed the Authority that audit of CPPA-G’s books is conducted every year, i.e. internal audit and then external audit by M/s Ferguson. He stated that the complainants hired the services of an ex-employee of Audit Office, which is against the spirit of confidentially.

Rihan Akhar further stated that dispute between the CPPA-G and the parties is two years old but they are seeking details of 20, 30 years.

“They have sought each and every thing of CPPA-G except the birth certificates of CPPA-G employees,” he continued.

He questioned the basis for the parties stopping payments if they did not have any data or information, adding that they whimsically stopped payment and were hurting interests of public at large.

“We all know Rs 3.20 per unit surcharge in electricity tariff is because of financial charges are generated because we are unable to recover 100 per cent from consumers. They want to make the public suffer to maximise their own profits,” Rihan continued.

He accused the Authority of withholding disputed amounts many times and conducting special and technical audit of those claims that were subsequently shared with the Authority and included in the FCAs; some are still under question and pending.

He requested the Authority to uphold their determinations as professional vigilance has already been carried out. He said, Auditor General also conducts audit of CPPA-G books regularly, and requested the legal counsel not to share those reports at the public hearing. He explained that Public Accounts Committee of Parliament is the competent forum to scrutinize the audit paras, which mostly are settled.

The Authority issued 15 determinations of March 09, 2021, June 13, 2022, July 07, 2022, August 12, 2022, September 12, 2022, October 14, 2022, December 16, 2022, January 11, 2023, February 16, 2023, April 18, 2023, May 25, 2023, June 12, 2023, August 19, 2023, August 08, 2023, and September, 08, 2023 regarding Fuel Price Adjustment (FPA) and 5 determinations of July 29, 2022, October 14, 2022, January 17, 2023, April 13, 2023, and July 07, 2023 regarding Quarter Tariff Adjustment (QTA) (impugned determinations).

The impugned determinations were challenged before the Lahore High Court, Lahore, which resulted in a consolidated judgment on February, 06, 2023, whereby the Impugned Determinations were set aside.

The judgment of the Lahore High Court was challenged by NEPRA and DISCOS, etc, before the Supreme Court of Pakistan, which were disposed on October 16, 2023. The SC in its order set aside the Lahore High Court determination and ordered that the consumers may prefer an appeal before the NEPRA Appellate Tribunal by taking all permissible, factual and legal grounds.

Approx. 350+ appeals were filed before the Tribunal by different consumers. After the proceedings the Tribunal ordered the following judgment on February 13, 2024: “the Tribunal partly allowed the consolidated appeals. It set aside the impugned determinations however, the notifications issued by the Federal Government were ordered to remain in force. The Authority was directed to decide the matter afresh after affording opportunity of hearing.

“The tribunal in view of its findings on the above issues, partly allowed, the consolidated appeals. The impugned determinations of (EPA) and (QTA), were set-aside and the same would be deemed pending before the Authority for its decision afresh, in accordance with Law, Rules, National Electricity Policy 2021, and National Electricity Plan 2023-2027 (if applicable), after affording meaningful and fair right of audience to the appellants.

“However, the impugned notifications issued by the Federal Government or the Authority, as the case may be, pursuant to the determinations shall remain in force. After a fresh decision by the Authority, suitable modifications/rectifications, and adjustments, if needed, shall be made in the said notifications of the federal government/authority. The remaining prayer in these appeals is declined, and to this extent, the appeals stand dismissed.”

In compliance with the order of the Tribunal, the Authority decided to provide an opportunity of hearing to the consumers on March 14, 2024. However, the consumers subsequently filed an appeal before the Islamabad High Court challenging the Tribunal’s order.

Islamabad High Court vide judgement of June 26, 2024 dismissed the appeals. The Tribunal’s order for fresh determinations to be made with public input was upheld. The notifications based on these Impugned Determinations were upheld to avoid economic disruption. The court allowed for adjustments to be made based on new determinations once they are finalized.

Pursuant to the decision of NEPRA Appellate Tribunal and Islamabad High Court, the Authority decided to conduct a hearing in the matter on September 03, 2024 Approx. 350+ appeals were filed before the Tribunal by different consumers. After the proceedings the Tribunal ordered the following vide judgment dated 13.02.2024:

“The tribunal in view of its findings on the above issues, partly allowed, the consolidated appeals. The impugned determinations of (EPA) and (QTA), were set-aside and the same would be deemed pending before the Authority for its decision afresh, in accordance with Law, Rules, National Electricity Policy 2021, and National Electricity Plan 2023-2027 (If applicable), after affording meaningful and fair right of audience to the appellants.

The Authority gave an opportunity to all the complainants to share their views so that an informed decision is taken.

After hearing the arguments, the Authority reserved the decision, which is likely to be in favour of CPPA-G.

Copyright Business Recorder, 2024