NEPRA refuses to undertake cost audit

Turns down ministry’s request, saying it is not in its mandate


Zafar Bhutta October 05, 2015
The efficiency of some power plants had gone down, prompting the government to order an audit in an attempt to revise the tariffs in line with the cost of fuel. PHOTO: AFP

ISLAMABAD:


The National Electric Power Regulatory Authority (Nepra) has refused to conduct an energy audit of inefficient independent power producers (IPPs), a move that will encourage power companies to collect more revenues from consumers on account of higher cost.


The disinterest from the power sector’s regulator came in response to a request made by the Ministry of Water and Power for undertaking an energy cost audit of electricity producers.

The ministry had approached the regulator following a decision by the Economic Coordination Committee of the cabinet to undertake the energy audit of power producers in a bid to revise their tariff rates, which would have benefited consumers.

“Nepra has expressed its inability to conduct the energy audit, saying it is not in its mandate,” an official said.

However, he added the IPPs got their licences from the regulator and it was Nepra’s responsibility to audit the companies.

Read: Ministry of Water and Power questions Nepra report credibility

Energy cost is an important component for setting tariffs of the IPPs. At present, power production by the IPPs stands lower than their capacity, but they are fetching higher prices, which are allowed by Nepra.

According to officials, two parameters are followed to arrive at the tariff for the IPPs. In the first case, the tariff depends on a certificate from the manufacturers about the equipment installed at the power plants. In the second case, it is examined how much fuel the power producers consume for generating electricity.

The official pointed out that the efficiency of some power plants had gone down, prompting the government to order an audit in an attempt to revise the tariffs in line with the cost of fuel. “The power producers are making money from the consumers at a lower efficiency rate,” he remarked.

Citing an example, the official said the government had conducted a heating value audit of all state-run power generation companies and filed petitions with Nepra asking it to revise the tariff depending on their efficiency rates. It desired to undertake the same exercise to examine the cost incurred by the IPPs, which would benefit the consumers.

“We have submitted a report with the ECC about the refusal of Nepra to conduct the heating value audit of independent power producers,” a power ministry official said.

Many power companies are blamed for inefficiency and its cost is borne by the consumers. The government has imposed a tariff rationalisation surcharge and other surcharges in addition to different taxes on the consumers.

Read: NEPRA gives seal of approval to net metering regulations

Despite this, power companies had to pay Rs297 billion and receive Rs633 billion from different consumers including provinces. Of the receivables, the private sector owed Rs388 billion.

The government has reduced the power subsidy to Rs182 billion this fiscal year compared to Rs221 billion in the previous year. The consumers have got Rs52 billion in subsidy so far this year.

Published in The Express Tribune, October 6th, 2015.

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COMMENTS (2)

Saqib Hammad Abbasi | 8 years ago | Reply Oh that was the answer to my question that there is load shedding for everyone hour after 2 hrs and bills are way high which is not fair to public :( should whom we appeal against :/ if the government is involved personally ..!
Haris | 8 years ago | Reply Not only NEPRA but all IPPs and K-Electric must be audited for energy cost.... Most of them are charging upto an outrageous Rs 18/unit !
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