ISLAMABAD: The Power Division struggled to plead its firmed-up stance on power tariff increases through surcharges and post-dated recoveries as the National Electric Power Regulatory Authority (Nepra) raised legal questions and wondered why the regulator was being expected to ‘rubber stamp’ the government decisions.

This came amid strong opposition from various consumer representatives over ‘repeated backbreaking tariff hikes’ in various shapes and names during two separate public hearings called by Nepra on government request on Thursday.

Nepra chairman Tauseef H. Farooqui presided over the hearings for the permanent imposition of up to Rs3.82 per unit surcharge on electricity consumers throughout the country for the power sector’s debt servicing besides recovery of pending fuel cost adjustments (FCAs) of up to Rs14.24 per unit of August-September 2022 from domestic consumers of up to 300 unit monthly consumption.

Not only the chairman Farooqui but all the four provincial members — Rafique Shaikh, Maqsood Anwar, Mathar Niaz Rana and Amina Ahmed — raised questions over the legal scheme of bringing surcharges to the regulator although these had not been cleared by the regulator as prudent electricity costs. Almost all the members asked if the regulator had the powers to scrutinise the debt servicing surcharges as prudent cost and if it did not have the powers to approve or disapprove the surcharge, why it was being asked to rubber stamp government decisions.

At the same time, the regulator also told the Power Division officials that it would not like to be a stumbling block to government endeavours but it should consult the Law Division and get back with a legal opinion to avoid any challenges ahead.

The Nepra chief said, unfortunately, the elephant in the room – the power sector’s governance issues, poor recoveries and high losses – remains unaddressed despite repeated warnings from the regulator and resultantly the government had to repeatedly indulge in short-term tinkering with surcharges and subsidies.

The Power Division representatives said the cabinet had approved last month a Rs3.39 per unit additional surcharge on top of the existing 43 paise per unit surcharge for debt servicing in the remaining four months of the current fiscal year and then replace it with Rs1.43 per unit for the full 2023-24.

When pointed out that the ECC on Wednesday already approved increasing the surcharge for FY24 up to Rs3.23 per unit to raise Rs335bn more funds on a summary moved by the Power Division itself, the officials could not elaborate saying they would stick to the petition in hand and would not talk about future.

Nepra members believed that one of the reasons behind the power sector loans was the inefficiencies disallowed by the regulator in tariffs which were now being financed through surcharges instead of addressing those inefficiencies.

Ironically, therefore, the impact of theft, losses, taxes and surcharges and so on fall only on the honest paying consumers whose propensity to pay had already evaporated and theft and low recoveries were even rising in posh areas, they said.

The representatives of various trade bodies and chambers of commerce also opposed the surcharge saying it would be the last nail in the coffin of already crippled industry.

The power division officials said the government had the power to impose surcharges under the law on top of the prudent tariff approved by the regulator to meet any financial obligation relating to electricity service.

Published in Dawn, March 3rd, 2023