NEPRA refuses to incorporate circular debt in power tariff

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ISLAMABAD: Power sector regulatory authority while setting aside the government plea to allow collection of Rs 235 billion from the power consumers under head hike in electricity bills, has finally declined to make the heavy circular debt as part of the power tariff.

The National Electric Power Regulatory Authority (NEPRA) in its decision, has finally refused to further burden the power consumers with Rs 235 billion, and include billions rupees worth circular debt as part of power tariff.

According to the decision of the power sector authority (NEPRA), it has allowed 48 paise per unit increase in the new annual tariff, out of which 14 paise/unit is given under the head T&D (transmission and distribution) losses while remaining 34 paise/unit is permitted on account of permanent defaulters.

Moreover, if the power distributing companies (DISCOs) do not take corrective measures, as per procedure, then 34 paisa increase will be adjusted in the next year tariff and power division will issue notification of annual tariff determined by the regulatory authority. Similarly, NEPRA has allowed making pending Rs 24 billion of permanent defaulters as part of the tariff, said NEPRA.

It is important to note that NEPRA has taken one and half year to decide the tariff as the federal government had challenged NEPRA’s decision of February 29, 2016, regarding power prices and obtained a stay order from Islamabad High Court (IHC).

It is also learnt that federal government had earlier requested the authority to allow collection of Rs 235 billion from the electricity consumers which was consisted of late payment charges, recoveries, T&D loss, previous year’s adjustments, and actual loss as part of the tariff. The government’s request was made ostensibly to create new sources to control the growing the menace of circular debt of country’s power sector.

Documents available with scribe show that as on June 30, 2017, the power sector circular debt was at Rs 379 billion.

It is worth mentioning that currently, the power sector circular debt has gone beyond Rs 400 billion.