Govt quietly collects Rs200b in power bills

Hidden surcharge recovered from unsuspecting consumers

ISLAMABAD: The government has silently collected over Rs200 billion from consumers of power distribution companies to bail out inefficient power firms in Sindh, Balochistan and Khyber-Pakhtunkhwa.

Power consumers were secretly burdened with various surcharges of around Rs200 billion during the 2015-16 fiscal alone after poor recovery of bills in the previous three years, insiders told The Express Tribune. The different charges were levied through notifications as a ploy to balance the budget in accordance with the various pacts signed with the International Monetary Fund.



These secret taxes were named as tariff rationalisation surcharge (TRC), which include the burden of sector-wise inefficiencies on account of stunted bills and line losses. Besides these inefficiencies, the TRC also includes the burden of government’s socio-political decision to have a uniform electricity tariff across the country.

As the power tariff for 2015-16 has not been notified, imposition and billing of these surcharges continues.

Earlier, the financial effect of this burden – known as transmission and distribution losses (TDS) – were subsidised and met by the federal government. But under the plan to manage circular debt, first drafted in April 2015, this burden was passed on to the consumers.

This change primarily affected the customers of efficient distribution companies (Discos) – mainly the Lahore, Faisalabad, Islamabad and Gujranwala electricity supply companies. The burden for a large-sized industry, already beset with crisis-like situation, is fixed at Rs3.63 per unit or an extra 30% above the Nepra-determined tariff.

Another financing cost surcharge (FCS) was also levied to cater for the loans secured by the water and power ministry to pay off the independent power producers (IPPs), the sources said.

In this way, more than Rs200 billion were billed and collected by the ministry from the customers of efficient DISCOs, where the bill collection is already nearly 100% and line losses under control.



The ministry’s written reply in the National Assembly claims the government recovered 89.58% of its power dues in 2013 that increased to 94.54% in 2016 i.e. an increase of 5% or an extra recovery of Rs60 billion. Similarly, the ministry has also claimed of reducing technical losses by more than 1% or an additional collection of Rs15 billion.

According to experts, with the enhanced efficiency as claimed by the power ministry, there is no reason for levying the above-mentioned surcharges.

According to legal experts, no surcharges other than to cater for one-time emergency can be levied above the Nepra-determined tariff, which duly caters for the full revenue requirements of the power sector.

Nepra’s power tariff determination for 2015-16 has been held up as the regulator has now stopped levying surcharges over the determinations. The power ministry will not be able to collect the required money without slapping additional surcharges now.

Published in The Express Tribune, August 17^th, 2016.