WEB DESK: According to a section of the press, the government is considering amending the National Electric Power Regulatory Authority (Nepra) law with a view to making it binding on the regulator to implement policy directives issued by the federal government; or in other words, to make Nepra functionally subordinate to the government’s decrees that it may deem appropriate to issue from time to time.
This, if implemented, would be extremely unfortunate as it would compromise Nepra’s very raison d’etre notably to take informed non-political decisions.
The reason behind this proposal by the federal government can no doubt be sourced to recent decisions by Nepra that effectively challenged the government’s directives. Examples of this are many. The latest among them was Nepra’s challenge to the Prime Minister’s directive to include one percent security cost for China Pakistan Economic Corridor projects for several pertinent reasons including (i) a draft summary moved by the Water and Power Ministry failed to clearly stipulate which category of projects are to be given the one percent security cost; (ii) to include the additional cost in those projects that have achieved finality will create legal complexities; (iii) tariff determination already has an in-built security cost in the administrative costs; (iv) for sabotage a separate insurance cost is already provided for in the tariff; (v) the life time of a project of 30 years would be burdensome for the domestic consumers; and (vi) allowing for the additional cost would be discriminatory against existing Independent Power Producers (IPPs), that as per an official of the Competition Commission of Pakistan (CCP) prima facie is discriminatory to similar projects which are not funded by the CPEC.
Another example is the rejection by Nepra of the Nandipur tariff of 15.63 rupees per unit proposed by Water and Power Ministry and instead approved 11.64 rupees per unit thereby making generation from the plant economically unviable. Nepra’s argument was that it allowed prudent costs in the tariff (project cost of 42 billion rupees in a 30-year tariff instead of project cost of 62 billion rupees recommended by the Ministry) and maintained that consumers could not be punished for the omissions or commissions of the project authorities.
Nepra in its last annual report 2014-15 made some damning assertions with respect to the performance of the power sector that included “lopsided generation mix, high transmission and distribution losses, mounting circular debt and poor governance that continue their way in fiscal year 2015 power sector,” or the “same pains that marred the power sector in fiscal year 2014”. Needless to add, this angered the Ministry which reportedly dispatched a letter to Nepra challenging its assertions, including that 70 percent meters were out of order.
Be that as it may, it is relevant to note that as per a recent survey undertaken by the World Economic Forum with partner Mishal Pakistan Nepra was one of the few institutions whose performance was perceived to have improved in 2016-17. Nepra’s ranking of 126 in 2012-13 declined during the first year in the tenure of the Sharif administration to 133 but improved to 129 in 2015 and in the current year it has improved still further to 121.
This improvement in ranking is precisely because Nepra is perceived to be taking decisions independent of the federal government and fulfilling its mission notably to “develop and pursue a Regulatory Framework, which ensures the provision of safe, reliable, efficient and affordable electric power to the electricity consumers of Pakistan; we shall facilitate the transition from a protected monopoly service structure to a competitive environment where several power sector entities function in an efficiency-oriented or market-driven environment and shall maintain a balance between the interests of the consumers and service providers in unison with the broad economic and social policy objectives of the Government of Pakistan”.
Sadly this is not acceptable to the administration as evidenced from the proposal to make it subordinate to the government directives and one can only hope that better sense would prevail.
Source: Business Recorder