ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) is currently facing a flood of petitions strongly opposing the proposed 400 percent increase in security deposits by Power Distribution Companies (Discos). The business community across the country has called for an audit of the amounts consumers have already deposited.
Key associations and chambers, including APTMA, KATI, PLGMEA, PVMA, KCCI, FPCCI, BQATI and others, have approached the Nepra Registrar to raise objections regarding the proposed increase. Some of these associations have also reached out to the Power Minister and other decision-makers, urging them to review the decision.
The following Discos have requested substantial increases in security deposits: GEPCO, LESCO, MEPCO, PESCO, HESCO, FESCO, TESCO and QESCO. They argue that due to significant increases in tariffs across all consumer categories, the current security deposit rates are insufficient, and the increases are necessary to protect the Discos from the potential risk of default. Nepra has requested feedback from stakeholders regarding these petitions and has scheduled a public hearing on February 12, 2024.
Failure to prevent fatal incidents: Nepra slaps Rs53m penalty on Discos
The Pakistan Leather Garments Manufacturers and Exporters Association (PLGMEA) has stated that the proposed changes would have far-reaching negative consequences for both industry and the broader economy.
PLGMEA has submitted the following submissions: (i) excessive financial burden on consumers, including manufacturers and exporters, who are already struggling with rising production costs; (ii) negative impact on industrial competitiveness. discouraging expansion and countering government initiatives aimed at promoting economic growth and increasing exports; (iii) lack of transparency and logical justification in the proposed deposit structures, raising concerns about the arbitrary nature of this policy proposal; and (iv) adverse affects on economic sustainability, undermining efforts to reduce electricity costs and support industrial growth.
PLGMEA has requested Nepra decline the petition and instruct Discos to prioritise revenue collection efficiency, refraining from imposing undue financial burdens on consumers.
An intervener, Arif Bilwani, in his petition has argued that the petitioners (Discos) have prayed that Security Deposit rates be equivalent to one percent of the land value, as per the rates fixed by the FBR, from domestic urban consumers for properties above 10 Marlas.
He said that this prayer is entirely absurd, impractical, irrational, unreasonable, and impertinent. The reason being that the values set by the FBR in cities like Lahore or Karachi vary significantly from area to area and location to location.
He cited the examples from Lahore and Karachi to illustrate this point: (i) Lahore City Examples: Shah Alam, Ravi Town Per Marla value Rs10,720,100/; 11 Marla value Rs117,921,100/; (ii) Edgerton Road, Gulberg Town Per Marla value: Rs6,049,400/-, 11 Marla value Rs66,543,400/-(iii) Ahbab Colony, Allama Iqbal Town Per Marla value Rs645,600/-, 11 Marla value Rs7,101,600/; and (iv) Officers Colony, Ghazi Road, Aziz Bhatti Town Per Marla value Rs680,500/-, 11 Marla value Rs7,485,500/-
According to him, there are 1,368 entries of land valuation for Lahore city alone, highlighting the vast disparities in land values.
Karachi City Examples: (i) Army Officers Housing Scheme, near National Stadium: Per square foot Rs50,000/- , -Per square yard Rs450,000/- , 11 Marla value Rs123,750,000/- (Rs450,000 x 11 x 25), 1% Security Deposit would be Rs1,237,500/; (ii) Bahria Town: Per square foot Rs1,400/-, Per square yard Rs12,600/; (iii) Baldia Town Per square foot Rs500/-. Per square yard Rs4,500/-.
There are 237 entries of land valuation for Karachi city, further emphasizing the impracticality of the proposed security deposit calculation.
Bilwani argued that the proposed security deposit calculation is mind-boggling and unjustifiable. For instance a consumer in Army Officers Housing Scheme, Karachi, would be required to pay Rs1,237,500/- as a security deposit and a consumer in Shah Alam, Lahore, would be required to pay Rs1,179,211/- as a security deposit.
He maintained that such exorbitant security deposits are unreasonable and unaffordable for the ‘paying consumers’, especially under the guise of mitigating the risk of default.
He further stated that petitioners (Discos) have failed to provide any category-wise data on defaulting consumers, which is crucial for a fair assessment, requesting Nepra to direct all Discos to provide the following data for the last two years: (i) domestic consumers; i.e., lifeline, protected, single phase, 3 Phase, Commercial Consumers: A-2, A-3 and Industrial Consumers -1, B-2, B-3, B-4, B-5
“I am confident that the number of defaulting consumers from Industrial, A-3, and A-1 (3 Phase) consumers is negligible, while most defaults occur among single phase consumers (lifeline, protected, and 100 to 700 kWh units),” he added.
“Discos due to their inefficiencies, negligence, and corruption, are resorting to arm-twisting tactics against paying consumers. This is unacceptable and must be addressed by Nepra,” Bilwani said, requesting the Regulator that as the petition is impractical, and discriminatory and against paying consumers; hence, the petition be rejected in toto.
Copyright Business Recorder, 2025
Comments