Power companies are facing mounting problems because of inefficiency and bad governance and the recovery of consumer bills has also dropped. PHOTO: FILE
ISLAMABAD:
The government is planning to snatch powers of energy regulators, who have refused to allow recovery of billions of rupees worth of electricity and gas theft from honest consumers, and place them under the control of relevant ministries.
At present, two regulators including the National Electric Power Regulatory Authority (Nepra) and Oil and Gas Regulatory Authority (Ogra) are monitoring the energy sector and have drawn scathing criticism from the government, which wants to include the huge cost of power and gas theft in consumer bills.
“According to a plan proposed by the Ministry of Law, the government wants to place these regulators under the control of Ministry of Petroleum and Natural Resources and the Ministry of Water and Power,” an official told The Express Tribune.
If the proposal gets the go-ahead from the prime minister, the petroleum ministry would exercise control over the affairs of Ogra whereas Nepra’s reins would be in the hands of the water and power ministry, the official added. Currently, these regulators are under control of the Cabinet Division.
Officials familiar with the development said the Ministry of Law had sent a summary to the prime minister, seeking his consent to push ahead with the plan. However, it runs contrary to the suggestion made by multilateral donors including the Asian Development Bank (ADB) and the World Bank, which call for giving more autonomy to the regulators.
The federal government has been piling on the pressure on the regulators rather than holding heads of power and gas companies accountable for poor governance, which is plaguing the entire energy chain. The proposal came following denial by Nepra and Ogra to increase the benchmark level covering the cost of theft, which is recovered from the consumers.
After seeking approval of the Economic Coordination Committee (ECC), the Ministry of Water and Power had asked Nepra to raise the benchmark from the existing 12.82% to 16% compared to actual losses of 18.76%. Power companies have suffered heavy losses due to the low benchmark.
The ministry argued that power companies would have to bear an extra burden of Rs45 billion if the benchmark was not increased. According to Nepra officials, the regulator deals with power distribution companies separately, therefore, it is not possible to increase the average benchmark.
Power companies are facing mounting problems because of inefficiency and bad governance and their recovery of consumer bills has also dropped.
According to officials of the Ministry of Water and Power, Rs375.181 billion was outstanding against electricity consumers in the private sector, of which Rs137.144 billion was not paid in the last one to three years. These were persistent defaulters who were continuously receiving electricity despite withholding past payments. The situation with gas utilities, especially Sui Northern Gas Pipelines Limited, is not much different as overall theft and distribution losses are high. However, Sui Southern Gas Company is in somewhat better position as its losses stand low.
Previous and present governments have been putting pressure on Ogra to increase the unaccounted-for-gas benchmark to cover theft and leakages. The current government has even got approval of policy guidelines from the ECC to pass the burden of Rs49 billion on to gas consumers, but the regulator has not implemented the decision so far.
“This is the reason why the federal government wants to place Ogra under control of the petroleum ministry in order to undertake the desired measures,” an official remarked.
Published in The Express Tribune, April 19th, 2015.
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