NEPRA completes hearing on government motion to increase rate of power surcharge from next financial year to pay off circular debt and power theft by power distribution companies
Staff Report
ISLAMABAD:
The federal government on Thursday faced the music in National Electric Power Regulatory Authority (NEPRA) for seeking hike in the rate of power surcharge from next financial year to pay off circular debt and power theft of power distribution companies (DISCOs).
Though NEPRA has already allowed the government to recover Rs 1.43 per unit surcharge from the power consumers from the next financial year, however, the government in a petition said that it was not enough to meet requirement and requested an increase of Rs 1.80 per unit to Rs 3.23 per unit on the electricity consumers from the next year to pay off debt and cost of power theft of inefficient power companies.
In order to arrive at a just and informed decision on the request of the federal government regarding imposition of Rs 3.23/unit surcharge on electricity consumers, NEPRA on Thursday conducted a hearing under the chair NEPRA chairman Tauseef H. Farooqi wherein NEPRA members Rafique Ahmed Shaikh, Maqsood Anwar, Mothar Niaz Rana and officials of NEPRA and power division were in attendance.
The federal government has submitted a new petition to NEPRA relating to hike in power surcharge from Rs 1.43 to Rs 3.23 per unit registering an increase of Rs 1.80 per unit for the next financial year.
In a petition, the federal government said that the previously approved power surcharge could not meet the requirement to pay off interest on circular debt.
“How far will this matter go, Member NEPRA Khyber Pakhtunkhwa Maqsood Anwar questioned feared that government will submit more applications to raise more surcharges again.
Why is it so early for next year’s power surcharge, Chairman NEPRA question and pleaded the federal government representatives “let the people breathe a sigh of relief.
The problems of our power sector are serious and circular debt is increasing rapidly, officials said.
Why should people be punished for the poor performance of discos? NEPRA Member Sindh Rafiq Ahmad Shaikh questioned and las out at power ministry officials over requesting further increase in power surcharges.
He called for resolving the problems of electricity companies.
We are also here to protect the rights of the users, he said.
Member Balochistan NEPRA, Mathar Niaz Rana, also expressed concern over poor performance of power distribution companies and called for addressing the governance issues within the companies.
There is a lot of criticism on us, Member Balochistan said adding that what confidence should we give to the customers, when will the situation be fixed?
Earlier, the federal government had requested to increase the power surcharge by Rs1.43 per unit for the next financial year.
Now, the federal government has submitted a request to increase the power surcharge to Rs 3.23 per unit, NEPRA authority said.
Member Punjab NEPRA Amina Ahmed asked the power division official not to mislead regarding imposition of surcharge.
She said that the federal government can levy a surcharge. She asked for explaining the matter.
Power division officials said that circular debt stood at Rs 2600 billion which included ‘payments’ to IPPs and Power Holding Company’s ‘debt’.
It is not NEPRA’s job to impose this surcharge, Chairman NEPRA said adding that imposition of power surcharge will not resovle the issue of circular debt any more.
Is it right act that the ministry that is controlling the power sector, Chairman NEPRA questioned.
In the current situation, the tariff of the industrial sector will reach Rs 50 per unit, Tanveer Bari, representative of Karachi Chamber of Commerce and Industry said.
Tanveer Bari said that Karachi Chamber of Commerce and Industry rejects request for surcharge increase.
Power division officials said that government was facing problems in paying off dues to Chinese coal-fired power plants.
They said that power division had submitted a payment plan to IPPs to the Finance Division.
According to petition, the federal government has requested that the already approved surcharges of Rs 1.43 per unit was not enough to meet the electric services obligations of Government.
It is relevant to note here that the NEPRA has already allowed the Federal Government to impose an additional surcharge of Rs. 3.39 per unit and Rs. 1 per unit from Mar-Jun 2023 and Jul 2023 to June 2024, respectively, with a cumulative impact of Rs. 149 billion on power consumers.
With the application of an additional Rs. 3.39 per unit, the total surcharge becomes Rs. 3.82 per unit for the four months of 2022-23, having an impact of Rs. 75 billion.
For FY 2023-24, the additional surcharge of Rs. 3.39 per unit will be reduced to Rs 1 per unit to cover the additional markup charges of PHL loans not covered through the already applicable FC surcharge of 0.43 per unit.
The total surcharge becomes Rs. 1.43 per unit for FY 2023-24, having an impact of Rs. 74 billion.
In view thereof, the Authority (NEPRA) has decided to allow the application of the surcharge to be recovered from different categories of consumers of K-Electric, for the period from March to June 2023 and for FY 2023-24, to cover the markup charges of PHL loans.
The Power Division said that the additional surcharge is intended to cover the markup charges of PHL loans not covered through the already applicable FC surcharge of Rs. 0.43/unit.
It was also explained that with these additional surcharges, an additional amount of Rs. 75 billion will be billed for the period from March to June 2023, against which around Rs. 68 billion will be recovered at an expected recovery rate of 90%.
Similarly, for FY 2023-24, with the additional surcharge of Rs. 1 per unit, an amount of around Rs. 74 billion will be recovered, assuming a recovery rate of 90%
According to sources, if the government imposes Rs 3.23/unit surcharge then electricity consumers across the country will face additional burden of approximately Rs 335 billion in 2023-24.
It is pertinent to mention that NEPRA will issue its detailed judgement after scrutiny of the data and this surcharge will be applicable on the power customers of the K-Electric and all DISCOs.
