Ministry may take NEPRA to court for tariff revision

Is seeking recovery of Rs82b cost of power theft from consumers

ISLAMABAD: The Ministry of Water and Power is mulling over the option of taking the power-sector regulator - National Electric Power Regulatory Authority (Nepra) - to court if it refuses to burden honest consumers with the annual cost of power theft amounting to Rs82 billion.

Talking to The Express Tribune, a senior ministry official revealed that they would take up with Nepra the proposal of quarterly tariff adjustment in line with actual line losses and bill recoveries. “The ministry is also considering moving court in case Nepra does not come up with a positive response,” he said.



The development comes after a recent decision taken by the government to secretly penalise honest consumers, who pay their bills regularly, by recovering the entire Rs82 billion cost of power theft every year.

Earlier, the government did not pass on the full relief of the plunge in crude oil prices to power consumers with the imposition of financial and tariff rationalisation surcharges amounting to over Rs100 billion per year.

In addition to these, the consumers are paying a debt surcharge to help inefficient power distribution companies to retire their debt.

In a high-level meeting held in the second week of April, the prime minister was informed that Nepra determined tariff for state-owned power distribution companies on the basis of two main assumptions - 100% bill recoveries and average 15.3% line losses.

Both these assumptions were not based on ground realities in the country. The water and power secretary told the meeting that average bill recoveries remained in the range of 88-90% whereas line losses stood around 19%.

Owing to the difference between Nepra’s assumptions and actual recoveries and line losses, the circular debt had surged from Rs320 billion in October 2014 to Rs374 billion in December 2016, he said.

However, improved performance of distribution companies in 2015 and 2016 with high recoveries of more than 93% and lower line losses at 16.30% coupled with weaker oil prices restricted the growth of circular debt. Without these improvements, the debt would have topped Rs684 billion, he added.



He asked the prime minister to issue policy directives to the power-sector regulator for allowing quarterly adjustment of actual line losses and recoveries in the tariff, which could bring down the subsidy bill by Rs84 billion.

The Finance Division secretary informed the meeting that the circular debt stood at Rs329 billion on April 5, 2017.

He suggested that in order to reduce the debt level, there was a need to address structural issues in cooperation with Nepra pertaining to tariff determination.

It was decided that the Ministry of Water and Power would approach Nepra to seek its nod for quarterly tariff adjustment keeping in view the actual recoveries and line losses.

Published in The Express Tribune, April 26^th, 2017.

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