Tariff controversy: Government relents, but with reluctance

Tells SC that notification of nearly 30% increase in power tariff stands withdrawn.

ISLAMABAD:

The Supreme Court had given the government until Friday to retract its notification of a sharp increase in electricity tariffs. Though government compliance came within the stipulated timeframe, tariffs reverted to the pre-Oct 1 position, only temporarily.

Technically, the top court had not questioned the nearly 30% increase in tariffs. It had, in fact, said that the government was not mandated to determine the electricity rate.

On Sept 30, the government notified an up to Rs5.89 per unit increase in power tariffs for those who consume 200 to 300 units per month. The Supreme Court swung into action, questioning the move on the grounds that proper procedure wasn’t followed vis-a-vis  the notification.



On Friday – the deadline set by the court for revisiting the notification – the government informed a three-judge bench, headed by Chief Justice Iftikhar Muhammad Chaudhry, that the notification has been withdrawn.

Earlier, Attorney General Muneer A Malik and Federal Minister for Water and Power Khawaja Asif made frantic efforts to avoid withdrawal of the notification – but in the end gave in.

Justice Chaudhry reminded Khawaja Asif what he had said on an earlier occasion: the National Electric Power Regulatory Authority (Nepra), and not the government, has the mandate to determine the power tariffs.

“Tell us whether you issued the notification or Nepra. If you issued the notification, what is the job of the regulatory authority?” the chief justice asked the minister.

Khawaja Asif informed the bench that the government would send a new summary to Nepra to determine the tariffs. The the government would pay Rs150 billion in subsidies to protect the poor power consumers.

The attorney general added that the tariff increase recommended by Nepra was more than what the government has notified which would not affect ‘68% of the population’.



This comment angered the bench. “It is not your job to determine whether the tariff is high or low, you should only tell us if it is your jurisdiction or not,” Justice Chaudhry said.

“In the presence of Nepra, the government cannot issue a notification to determine power tariffs.”

When the chief justice asked whether or not the government would withdraw the September 30 notification, Nepra Chairman Khawaja Naeem said the government had already determined the power tariffs and circulated the summary among the clients and that it should be allowed to continue.

“Are you surrendering your authority to the government?” Justice Chaudhry asked Naeem.

The chief justice remarked that the government supplied gas to fertiliser companies and industries at a subsidised rate but nothing was being done for peasants and growers.

“Since the companies have failed to provide fertiliser to growers at a reasonable rate, and fertiliser is smuggled to Afghanistan and Iran, the government should divert gas for cheap power generation,” he said.

This, the Nepra chairman agreed, could help bring down power tariffs substantially. “If the government provided 100% gas to the power generating units, then the tariff would come down by at least 25% to 30%.”

The water and power minister said supplying gas to industries at subsidised rates was an old policy, which, he said, the government would review.

Justice Jawwad S Khawaja, another judge on the bench, said that more than Rs440 billion was outstanding against various departments and big consumers.”This is sheer exploitation,” he added.

“The government has perpetuated and aggravated the problems of people by unrealistically increasing power tariffs,” added Justice Gulzar, the third judge on the bench.

The water and power minister said it was the government’s priority to ensure gas supply to domestic consumers in winters when the demand skyrocketed.

“We have been only 100 days in power and we need time to fix the 40-year-old system,” he said. “By next year, we will have more gas supply from Iran and we need time to radically reduce dependence on thermal power.”

Later, the court adjourned the hearing for two weeks.

Published in The Express Tribune, October 5^th, 2013.