July 24, 2008	Thursday	Rajab 20, 1429

ISLAMABAD, July 23: The provinces have protested again the federal government’s decision to pass on to electricity consumers the impact of rising fuel prices on a monthly basis by replacing the existing biannual system of automatic fuel adjustment mechanism.

Informed sources told Dawn on Wednesday that provincial governments had taken up the issue with the centre and urged it to withdraw the decision which, according to them, had been taken without consulting the provinces.

They argued that any matter affecting provincial interests could not be taken up by the National Assembly. “If the decision is treated as a precedent, the federal government could take any step detrimental to provincial interests by taking advantage of the parliamentary strength at the federal level, affecting the very nature of the Constitution.”

The provinces said if the centre wanted to change the existing system, it should refer the matter to the National Finance Commission.

The provincial governments contended that electricity was an inter-provincial matter as it was a part of the Concurrent List and any change in the tariff pattern could only be made with the approval of the Council of Common Interests (CCI).

“Therefore, any change in the concurrent list should come through the CCI and the federal government has no power to unilaterally make any amendment through the Finance Bill.”

The government decided to revise electricity tariffs every month and pass on the impact of rising fuel prices to consumers under an automatic fuel adjustment formula, which was introduced in the Finance Bill by amending the National Electric Power Regulatory Authority (Nepra) Act.

Nepra has been asked to implement the new tariff mechanism from Aug 1.

This will be in addition to a revision of long-term electricity rates on the basis of petitions filed by distribution companies seeking a 35 per cent increase in tariff.

Nepra is currently holding public hearings on the petitions and is expected to come up with its tariff determination soon.

At present changes in fuel prices are passed on to consumers on a biannual basis through the automatic fuel adjustment formula. The increases are allowed on the basis of actual fuel prices over the past six months and the rate of increase in the consumer price indicator.

The sources said that Nepra was facing difficulties in implementing the new system. It believes that the revision of monthly electricity bills may not be possible because of quick changes in tariff. This will create confusion among distribution companies and consumers.

It would also be difficult for Nepra to ensure regulatory control over accurate charges because of its complex billing cycle, the sources added.