Ministry seeks power to slap surcharges on consumers

Suggests amendments to the Nepra Act to turn the regulator toothless

ISLAMABAD: The Ministry of Water and Power is seeking discretionary powers on a permanent basis in an attempt to receive over Rs100 billion from bill-paying electricity consumers with amendments to the Nepra Act to make surcharges part of the uniform tariff, officials say.

At present, different surcharges are being collected from power consumers to raise funds for inefficient electricity distribution companies. However, the ministry wants the government to change the law to give constitutional cover to the surcharges and make them permanent part of the power tariff.



The proposed amendments to the Nepra Act are aimed at fixing a cost-covering tariff rather than the determined tariff that is set artificially low.

According to officials, various surcharges having a cumulative impact of Rs200 billion were imposed on power consumers in 2015-16. However, the ministry disputed the figure, saying the collection was Rs120 billion including even the Neelum Jhelum project surcharge.

Among these surcharges included the tariff rationalisation surcharge and financing cost surcharge - the latter levied to bear the cost of loans secured by the Ministry of Water and Power to pay independent power producers (IPPs).

This can be seen in the backdrop of power distribution companies’ inability to recover 100% of electricity bills as required by the regulator.



Legal experts, however, suggest no surcharge, except for the one required in an emergency situation, can be slapped over and above the tariff determined by the National Electric Power Regulatory Authority (Nepra), which duly caters to the entire revenue requirement of the power companies.

“Power consumers will be paying over Rs100 billion annually if amendments to the Nepra Act are approved,” an official said.

In a summary sent to different stakeholders including provinces, the water and power ministry is seeking seven amendments to the Nepra Act to turn the regulator toothless. The regulator, however, has been resisting the application of policy guidelines designed by the federal government to burden the consumers.

Prime Minister Nawaz Sharif has directed the power ministry to take the summary to the Council of Common Interests (CCI) - an inter-provincial body - for approval. The ministry also wants the CCI to place the regulator under its control.



The ministry is of the view that the regulator should play the role of just an advisory body rather than its current activities as a judicial body.

It suggests that policy directives of the federal government should be binding on Nepra through amendments to the law. Rule-making powers should rest with the government and all licensing requirements for power generation should be restricted to grid connectivity, it says.

The ministry also proposes a multiple buyers model for the electricity market and establishment of a tribunal.

The ministry refused to comment on the matter.

Published in The Express Tribune, December 6^th, 2016.

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