Nepra advice ignored by power ministry

Regulator sent 11 recommendations, none of which have been implemented.

ISLAMABAD:

The water and power ministry has apparently chosen to ignore the several recommendations made by the National Electric Power Regulatory Authority (Nepra) to alleviate the chronic energy crisis.

Official documents obtained by The Express Tribune show that Nepra had sent 11 policy recommendations to the water and power ministry over the past two and a half years, none of which were adopted by the ministry.

Nepra Chairman Khalid Saeed testified before a parliamentary committee that the regulator had regularly sent recommendations because it wanted to resolve the issue of the inter-corporate circular debt in the energy sector, which he felt “would cripple the energy sector”.

Most of the recommendations involve deregulating pricing in the energy sector and gradually reducing the government’s role. The finance ministry and the Planning Commission have, in the recent past, backed many of the same recommendations that Nepra made.

Nepra began sending its advice to the ministry in November 2009, when it asked the ministry to restore the supply of natural gas to power generation companies. It also urged the government to restructure state-owned power generation companies in order to make them more efficient and better-governed. Nepra also recommended that the more inefficient power generation companies be shut down.

The power regulator has also been advocating for timely payments being made to private-sector power generation companies, known as IPPs, by the state-owned electricity distribution companies.

Delays in payments have caused substantial liabilities to pile up in the power sector, which are financed through bank borrowing.

The interest payments on those loans further financially burden power companies and reduce their ability to continue buying fuel in order to run at full capacity, hence further exacerbating the energy crisis.

Published in The Express Tribune, July 18^th, 2011.