ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) sharply criticized power Distribution Companies (Discos) on Tuesday for seeking excessive increases in security deposit rates at the behest of the Power Division.
Nepra announced it would withhold its determination on the matter until an audit of existing deposits is completed.
Nepra members, including Rafique Ahmad Shaikh, Mathar Niaz Rana, Amina Ahmed, and Maqsood Anwar Khan, launched a barrage of questions at the Discos’ team, led by Irfan Butt from Gepco.
Nepra facing multiple pleas against rise in Discos’ security deposit
The team, according to Nepra, presented a weak case—consistent with past presentations—which led the authority to reject the proposal. The Discos’ request for a security deposit increase was viewed as an unjust attempt to shift the burden of their inefficiencies onto consumers.
Notably, no representative from the Power Division, which had instructed the Discos to file the petitions, attended the hearing, likely due to concerns about facing criticism from Nepra.
Nepra also directed K-Electric and Sukkur Electric Supply Company (LESCO) to file similar petitions, as any increase would apply nationwide under a uniform tariff.
Representatives from various interest groups, including Arif Bilwani, Tanveer Barry, Imran Shahid from JI, Asim Riaz APTMA, Aamir Sheikh, Rehan Jawed, and members of the Lahore Chamber of Commerce and Industry, rejected the proposed security deposit hikes. They argued that the move was a result of Discos’ inefficiencies and mismanagement.
A key question—whether the increased security deposits would apply to mosques and military installations—remained unanswered by both Nepra and the Discos. All the Associations have already rejected the proposed increase in security deposit rate through their representations.
The proposed increase was intended to ensure consumer defaults were covered, with existing consumers also affected. Payments for the increased deposits would be collected in installments. However, Mathar Niaz Rana, NEPRA’s Member (Tariff), raised concerns about the authenticity of the current deposit rates. Nepra’s audit team had already identified discrepancies in the deposits of three Discos.
There were also concerns within Nepra that raising security deposits could push more consumers toward solar energy solutions, reducing demand and, consequently, Discos’ revenues. Irfan Butt, DG of MIRAD at Gepco, acknowledged that such a measure could further dampen demand.
Tanveer Barry, representing the Karachi Chamber of Commerce and Industry (KCCI), highlighted the impossibility of industries absorbing the proposed increase in security deposits—from Rs 2,010 to Rs 54,783. He emphasized that such a hike would force industries to switch to solar energy, further exacerbating the challenges faced by Discos.
According to the NEPRA State of Industry Report 2024, K-Electric’s sanctioned load is 13,031 MW, but peak demand only reaches 3,500 MW. Similarly, Discos’ sanctioned load is 97,900 MW, while their transmission capacity stands at over 23,000 MW. Barry argued that the new rates should not apply to existing consumers. He called the proposed security deposit increase - based on 1% of the FBR value - “exorbitant and unreasonable.”
The inefficiencies and corruption of the Discos, he argued, should not penalize consumers. He suggested that Nepra mandate all Discos, including K-Electric, to conduct a thorough audit of security deposits, with public disclosure, and allow consumers to offer bank guarantees instead of cash deposits.
Aamir Sheikh warned that the proposed hike in security deposits would be untenable for large consumers, especially in light of the country’s ongoing deindustrialization and economic challenges. “In the current situation, it is impossible for industries to pay additional sums of Rs 25-30 crores to Discos,” he said. He suggested that if industrialists had any spare capital, it would be better invested in establishing new industries and generating jobs, rather than in increasing security deposits.
Sheikh pointed out that under independent B3 feeders, industries had already paid for the installation of all necessary equipment, including panels, transmission lines, and high-tension (HT) installations. The cost of this infrastructure far exceeds the billing, and Discos now possess and control this equipment as additional security.
He added that the security deposit of Rs 10 million paid 30 years ago has compounded with interest, amounting to over Rs 300 million today, which should be sufficient.
Arif Bilwani argued that Discos have been inflating their sanctioned loads, which were originally based on their available capacity.
According to the NEPRA Annual State of Industry Report 2024, the total sanctioned load of the 10 Discos (excluding K-Electric) is 97,899 MW, while their peak demand in 2023-24 was only 27,385 MW. For K-Electric, the sanctioned load is 13,032 MW, yet peak demand only reached 3,568 MW. This discrepancy, Bilwani claimed, has resulted in Discos collecting inflated security deposits for loads they can never deliver.
Copyright Business Recorder, 2025
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