Power sector: Plea to pass on burden to honest consumers turned down

NEPRA disagrees on govt argument; cut in tube well tariff also notified

ISLAMABAD: The PML-N government has made a conditional cut in power tariff for tube wells after it announced major incentives for the agricultural sector that witnessed negative growth in the recently-concluded fiscal year.

The government notified a cut of Rs3.50 per unit, taking the tariff down from Rs8.85 to Rs5.35. However, the rate would be applicable during the day time, starting from July 1.

Defaulters of electricity bills will not be able to enjoy the relief and officials said that majority of the farmers in Punjab fell under the category as dues of over of Rs32 billion remained pending.

Officials added that the government has also waived general sales tax on electricity bills, but had put this burden on provinces. If provinces show reluctance to bear the burden, power distribution companies would charge it from farmers.

Nepra turns down plea

Meanwhile, the National Electric Power Regulatory Authority (Nepra) turned down a request of the Ministry of Water and Power to pass on a burden of Rs142 billion to honest consumers paying regular bills.

The regulator said that it could not pass on the cost of inefficiency, bad governance and power theft to those consumers who were making regular payments.

In a petition, the federal government stated that the tariff setting mechanism is based on 100% recovery from consumers of the determined revenue requirement, whereas, presently, the sector recoveries lie in the range of 85-89% per annum.

Resultantly, a shortfall always accrues on account of less payment to the power producers, which leads to piling circular debt. Therefore, the government said, the assumption of 100% recovery be reconsidered by the Authority, keeping in view sound business practices as well as the situation prevalent in Pakistan.

The authority, after careful review of the government contentions on the issue of recovery, was of the view that it never disallowed the actual write-offs against the private defaulter given that the due process of law has been followed while writing off the receivables.

However, the write-off against receivables of any government cannot be allowed considering the fact that the government is a “going concern”.

The power regulator said that it considers that if the provision for doubtful debts is considered at national level it would provide no incentive to efficient companies.

On the argument that since presently the sector recoveries are in the range of 85-89% per annum, the Authority considers it a pure operational inefficiency on the part of DISCOs. 

Published in The Express Tribune, July 12^th, 2016.

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