ISLAMABAD: National Electric Power Regulatory Authority (NEPRA) has approved 5 per cent annual indexation of Net Hydel Profit (NHP) of KP and Punjab, subject to final nod of Council of Common Interests (CCI).

The Authority, in its decision of April 5, 2021, determined tariff for WAPDA Hydroelectric for FY 2020 -23, whereby NHP was allowed at the rate of Rs. 1.10/kwh with no indexation. The decision also stated that any indexation of NHP approved may be considered by the Authority as per applicable law.

The Government of KP filed a Motion for Leave for Review (MLR) stating that the CCI has already approved 5% indexation of NHP. During the proceedings of MLR, the Authority observed that a majority of the submissions of GoKP have already been deliberated upon during the proceedings of WAPDA’s determination of April 5, 2021, and that GoKP has not provided any conclusive evidence which in categorical terms states that CCI has allowed indexation of 5% over the rate of Rs. 1.10/kwh.

During the proceedings of MLR, the Authority also noted that payments have been made to Governments of KP and Punjab on the basis of an indexation rate of Rs. 1.155/kWh which started from FY 2018; therefore, being cognizant of the constitutional provisions of NHP and its importance to the provinces, the Authority decided to allow indexation on an interim basis for 6 months from the date of notification of the decision of the MLR dated August 23, 2021; the Authority also stated that GoKP shall approach CCI to obtain clear guidelines on the issue of NHP. The MLR decision was notified on May 27, 2022, and accordingly the six-month period expired on November 26, 2022.

As per the GoKP, in pursuance of the abovementioned MLR decision, it approached the CCI to obtain clear guidelines on the issue of NHP and indexation. Therefore, GoKP through its legal counsel, on July 19, 2022, submitted Tariff Modification Petition against the Authority’s decision of August 23, 2021, in the matter of WAPDA Hydroelectric Tariff Petition for FY 2020-21.

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The Modification Petition was considered by the Authority on July 21, 2022, wherein the Authority decided to admit the same. Accordingly, notices of hearing in the matter were published in newspapers on August 12, 2022, and August 13, 2022, while individual notices to stakeholders were sent on August 16, 2022.

A hearing in the matter was held as per schedule on Wednesday, August 24, 2022, wherein the Petitioner, along with its legal counsel, presented its case and submitted that, in compliance with the Authority’s directions, it had obtained clear guidance from the CCI regarding the annual indexation of NHP in the form of para 35 of the minutes of the 49th meeting of CCI.

However, during the hearing, the representative of GoPb submitted that Punjab is a major stakeholder and it considers that undue burden should not be passed onto the consumers. According to the representative of GoPb, this issue was added as an ex-agenda item in the CCI’s 49th meeting, meaning thereby that GoPb’s comments were not obtained before presenting the case before the CCI and that Punjab is not even aware of the rationale for 5% indexation.

The representative of GoPb further submitted that GoKP has already moved a separate summary regarding the indexation of NHP and the same is submitted to provinces for their respective comments. The GoPb, according to its representative, is working on exploring world best practices regarding NHP payment mechanism so that the end-consumer is not unduly burdened.

Therefore, the representative of GoPb submitted that the request of the Petitioner for 5% indexation may not be entertained until the CCI gives a decision on the separate summary of GoKP, which GoKP has already submitted to provinces for their respective comments.

During the hearing, Anwar-ul-Haq, legal counsel to GoKP pointed out the fact that discussions held during the 49th meeting of the CCI are not consistent with the decision of the CCI. Similarly, the representative of WAPDA Hydroelectric reiterated its opinion regarding the indexation of NRP and submitted that no clear guidance has been obtained by GoKP.

The Authority in its determination stated that it has gone through the documentary evidence and arguments of concerned parties and decided that in accordance with Rule 16(6) of NEPRA (Tariff Standards & Procedure) Rules, 1998, read with 3(2) of the National Electric Power Regulatory Authority (Review Procedure) Regulations, 2009, the Authority modified its order and approved its decision in the matter of Motion for Leave for Review filed by Energy and Power Department, Govt. of Khyber Pakhtunkhwa against the Authority Decision dated April 5, 2021, regarding WAPDA Hydroelectric Tariff Petition for FY 2020-21, issued on August 23, 2021 to the following extent: (i) to approve 5% annual indexation of Net Hydel Profit (NHP) over the rate of Rs. 1.1 0/Kwh to the Government of Khyber Pakhtunkhwa and Government of Punjab from FY 2015-16 and FY 2016-17, respectively, subject to its adjustment, if any, in light of the CCI decision; and (ii) Government of Khyber Pakhtunkhwa to move/ pursue its summary before CCI in order secure explicit approval in the matter and till receipt of any CCI order/ decision in the matter, the 5% annual indexation of NHP shall be continued.

Copyright Business Recorder, 2022