ISLAMABAD: Ministry of Water and Power has convened an inter-provincial meeting on Friday (today) to discuss the much talked-about amendments in Nepra Act and other energy-related issues of provinces.
The meeting to be presided over by the Minister for Water and Power, Khawaja Asif, is expected to be attended by the Chief Ministers and energy officials of all four provinces.
According to sources, Sindh and KPK have already opposed amendments in the Nepra Act especially such steps which would negatively impact on investment, whereas Punjab and Balochistan are supporting amendments.
Federal government claims that Nepra has a colossal loss of over 1 trillion on the power sector since 2006-07 which appeared in the form of circular debt burdening the national exchequer and electricity end consumers.
The sources said Sindh and KPK in the last CCI (Council of Common Interest) meeting opposed the proposed amendments in the Nepra Act and in that particular meeting it was decided to assign the Ministry of Water and Power to come up with a consensus document after getting inputs from all stakeholders including provincial governments of Sindh and KPK.
“We have shared the document pertaining to the Nepra Act with the provincial governments and now for more detailed deliberations, Federal Minister for Water and Power Khawaja Mohammad Asif has convened the meeting of Chief Ministers of the four provinces here on February 10,” the sources said.
The sources said, Water and Power Ministry is in the process of fine-tuning the changes to be introduced in the Nepra Act as in the last CCI meeting it was decided that after getting the inputs of provincial governments on this particular issue, the Ministry would come to the next meeting with the consensus document with regard to amendments in the Nepra act.
Chief Minister Punjab Mian Shahbaz Sharif on a number of occasions criticized Nepra for not facilitating investors intending to establish projects in the province.
The KPK government maintains that hydropower generation is the strength of the province. And as licencing for hydel will still be referred to Nepra therefore de-licencing will have no positive effect on the province and investors will move towards thermal where no licencing would be required.
The proposed amendment to section 31 of the Nepra Act envisions the removal of the Nepras power to determine tariff. Presently, Nepra holds the power of determination of tariff as its core statutory tool for regulating the energy projects and pricing within the country. This is in line with international jurisdictions, where energy regulators are empowered to determine tariffs as their primary tool for regulatory oversight.
The KPK government argues that any modification or curtailment of such power, provided by the Nepra Act, removes the core function of the Authority and will severely compromise the ability of the regulator to ensure safe, reliable and cost-efficient supply of electric power to end consumers.
The amendments speak of formulation of tariff policy. Before approval of proposed amendments, the tariff policy needs to be formulated and approved by CCI. The tariff policy is against the spirit of Article 157 (2)(C) which allows the provinces to determine the tariff for the province.
Furthermore, it will have a significant negative outcome as after determining component tariff, the overall tariff will be determined by the federal government and it will be the jurisdiction of federal government to announce full tariff resulting in delayed announcement of tariff of the province-owned power projects.
The provincial government further argues that the proposed amendments will abolish the provincial representation. KPK has proposed that the federal government should possess full power to appoint the Chairman and Members of Nepra, displacing the existing eligibility criteria for such positions.
“Such amendments are tantamount to forceful removal of the provincial representation within the functions of the Nepra,” the provincial government added.
Commenting on establishment of Authority, the KPK government said that establishment of an independent tribunal for judicial review of the decision of the regulator is a welcome step if it provides a meaningful forum of appeal to aggrieved parties in a capacity equal to High Court.
It simply adds another tier to the dispensation of justice as it has been proposed that decisions of the Tribunal shall be appealable before the High Court, which merely adds another tier rather than serving any useful purpose. Ideally, the Constitution should be amended to create a specialized tribunal at par with the High Court.
KPK has also opposed clipping of regulatory powers, saying that proposed amendments restrict actions against companies owned or controlled by the federal government.
The proposed amendments suggest clipping the Authoritys policy powers of investigation and imposing penalties over the majority of its industry thus crippling the regulator. KPK said it will be discriminatory to provincial interests in the sector, as well as private commercial enterprises. It will also have adverse effects on development of the industry through privates / commercial agents.
Commenting on preparation of National Electricity Policy by federal government with the approval of CCI, KPK said that the proposed amendments refer to National Electricity Policy, which presently does not exist. Under section-7 of the Nepra Act, the Authority possesses exclusive jurisdiction for regulating the provision of electric power services.
The proposed amendment will remove power and function of Nepra as functions of the Authority will rest with the National Electricity Policy and plans to be formulated by the federal government.
KPK has proposed in the amendment that the Federal Government be provided unfettered authority over Nepra through binding directions and in-applicability of investigations and penalties. These amendments effectively cripple the Authority in its role as the energy market regulator, which is detrimental not only to the industry as a whole but also to the public.