A serious row has emerged between the Water and Power Ministry (WPM) and the National Electric Power Regulatory Authority (NEPRA) over the massive increase in power tariff of power distribution companies (DISCOs) after the inclusion of monthly fuel price adjustment in the power tariff for the current fiscal year.
An official source said the WMP had serious objections over the inclusion, which NEPRA had built into the new tariff by increasing the benchmark price of furnace oil from Rs 29,000 per tonne to Rs 65,000 per tonne. The ministry was of the opinion that the regulator was not empowered to change the benchmark fuel price on its own as fluctuation in fuel prices occurred, and in case they went down the impact could not be passed on to the consumers.
“We have requested an immediate meeting to address the issue, which will be held immediately after the return of the finance minister from Davos,” the source said, adding that the matter could not be resolved by the ministry alone as approval of the government was required to reverse the NEPRA determinations for the current fiscal year.
NEPRA has so far determined the tariff for the Gujranwala, Islamabad and Peshawar region utility companies. The recently determined power tariff for Islamabad Electric Supply Company (IESCO) has been increased by Rs 1 to Rs 4.35 per unit and for Peshawar Electric Supply Company (PESCO) by Rs 1 to Rs 6.50 per unit for different slabs. “The government is in no position to pass on this massive increase as it has always followed a gradual increase approach,” said the source.
NEPRA has managed to build in the fuel price in the power tariff as the government recently gave it powers to directly pass on the fuel price adjustment impact to the consumers. To avoid public criticism, the regulatory body has cunningly built it in the power tariff and the government alone would be blamed for the increase.
The WMP wanted NEPRA to maintain the previous system of determining an annual tariff for DISCOs based on their operating costs and adjusting the fuel price on a monthly basis.
He said the regulatory authorities were trying to play realpolitik with the government by wrongly interpreting the law, which only allowed it to directly pass on the fuel price adjustment after determining it on a monthly basis. It could not be inbuilt in the annual tariff, he added. The new power tariff will put the government in a difficult position as it can neither pass on the increase in power tariff to the consumers, nor can it bear the massive resultant subsidy.
NEPRA has been under fire from the WMP and Finance Ministry for the last few months as they hold its tariff determination mechanism responsible for the continuation of the power crisis and the resultant circular debt. The regulator was under pressure to raise the limit of line losses to a higher level to reduce the financial losses to DISCOs, which were piling up in the government’s account.
