ISLAMABAD: National Electric Power Regulatory Authority (Nepra) on Thursday showed consent to put its stamp on proposed additional surcharge of Rs 3.39 per unit on consumers using 300 units and above across the country, a prior action for the ninth IMF programme.

The Authority, comprising Chairman Tauseef, H Farooqi, Member Sindh, Rafique Ahmad Shaikh, Member KP, Maqsood Anwar Khan and Member Balochistan, Mathar Niaz Rana and Member Punjab, Amina Ahmed quizzed Power Division and CPPA-G officials seeking Regulator’s nod for imprudent costs related to Discos’ inefficiencies given that in the past such costs were disallowed to Discos.

Power Division stated that it wants to impose additional surcharge of Rs 3.39 per unit from March 1 to June 30, 2023 in addition to existing surcharge of Re 0.43 per unit. However, additional surcharge will be Re 1 per unit plus existing Re 0.43 per unit (total Rs 1.43 per unit) to be recovered from July 1 to October 31, 2023 and November 2023 to June 2024.

Rs3.82/unit surcharge approved for power consumers

The Authority also questioned that if it was powered to reject government’s Motion of additional surcharge, an official representing CPPA-G replied that the Regulator had such powers.

The country’s biggest chamber i.e. Karachi Chamber of Commerce and Industry rejected proposed additional surcharge, saying it would badly hit the industry and business.

Member KP inquired if industry, whose tariff would reach 35.52 per unit from Rs 32.13 per unit with increase of Rs 3.39 per unit, opts for off-grid solution then how would additional surcharge target be achieved by the government? Power Division representative CPPA-G said since this type question was not framed that is why he has no answer to this question.

Joint Secretary Power Division, Mehfooz Bhatti said the government extended subsidy of Rs 905 billion during the current fiscal year but the government would recover prudent cost from consumers. He acknowledged that it was difficult time for everyone.

He further stated the government had paid subsidy of 0.7 percent of GDP, saying how much burden government could bear as it also had a limit. He said the government had to impose taxes on people to extend subsidy.

Chairman Nepra argued that issues of governance and recovery were not being resolved whereas losses were deteriorating with every passing day.

“We all know what is wrong with power sector. We are not curing real illnesses and just focusing on subsidies and surcharges. Why don’t we take the bull by the horns,” he said and queried why quality Board Members were not being appointed.

Nepra, it was noted, has allowed losses of about 11 percent whereas actual losses are 16.06 percent, which implies that four percent losses are being recovered from those consumers who pay bills. One percent loss constitutes Rs 25 billion.

Nepra directed Power Division to get advice from their law department if they can turn down Federal Government Motion.

Mathar Rana, Member Balochistan maintained that it was the government’s decision with direction to Nepra to include it in its schedule of tariff. Member Punjab opined that the Authority was being asked to rubber stamp it.

Tanveer Barry of KCCI said the chamber rejected federal government’s request to impose surcharge @ 3.39/unit. He said power theft in Pakistan was of Rs 380 billion which will reach Rs 520 billion but instead of taking measures to control it the government was imposing surcharge on those consumers who were paying bills.

He further contended that Pakistan’s exports shrank to 19 percent in February, and inflation hit nearly a 50-year high. The government has discontinued zero-rated industrial package for export sector, questioning how industry will survive after imposition of additional surcharge and recovery of QTA.

He requested Nepra not to accept federal government’s request of additional surcharge.

The Regulator conducted another public hearing for recovery of Rs 52 billion from consumers in eight instalments. The amount was deferred as FCA last year due to high electricity bills.

Nepra questioned as to how it can allow recovery of pending FCA in eight instalments as Supreme Court in its decision allowed recovery in only four instalments. During the hearing one of the participants revealed that the government approved imposition of additional surcharge of Rs 3.23 per unit to recover Rs 335 billion from consumers during next fiscal year aimed at ensuring the continuation of the IMF programme.

Power Division team, however, did not respond, saying that they can offer comments only on whatever proposal is before the Regulator.

Copyright Business Recorder, 2023