LAHORE: Justice Syed Mansoor Ali Shah of the Lahore High Court has directed the Ministry of Water and Power joint secretary and the Nepra member (tariff) along with the Nepra registrar to appear in person on Sept 9 to answer questions about determination of electricity tariff in the country, says a handout.
Mian Irfan Akram, deputy attorney general, shall also obtain instructions and assist the court on the hearing date.
The judge also issued notice to Khwaja Muhammad Naeem, Nepra member (tariff), for the next date. The court directed the respondents to file detailed replies to the following legal questions before the said date of hearing:
Whether Nepra can function without a chairman?
Whether the holding out of the member tariff as chairman, Nepra, in annual report 2012-13 amounts to misrepresentation and fraud on the statute?
Whether the authority can function with three members and is this arrangement lawful under Section 3 (6) of the act?
Obligation of the federal government in issuing of notification upon intimation of the tariff rates by Nepra under Section 31 (4) and the effect of pendency of reconsideration or review filed by the federal government or the distribution companies respectively?
Amicus curiae says subsidy is a disservice to energy sector as it rewards Discos’ inefficiencies
Whether the cabinet policy whereby the lowest rate determined by the Nepra amongst the Discos is to be accepted as the rate to be applied nationwide and remaining Discos granted subsidies to plug the difference in rates is legal?
Whether subsidy can be granted after the determination of rates by Nepra?
The date when the rates determined by Nepra become effective?
Discrepancies in Nepra tariff determination: official
These issues of public importance cropped up during hearing of a petition filed by Crescent Fibres Limited regarding determination of tariff for the financial year 2013-14, effective from July 1, 2013 but till date, even after a lapse of almost a year, the new tariff, in spite of its determination by Nepra, is not being notified.
The petitioner as well as all the electricity consumers in the country are being subjected to higher tariff. The new tariff determined by the Nepra is lower than the tariff in the previous years and the consumers are being deprived of this benefit simply due to the delay in issuing notification by the federal government in terms of aforementioned provisions.
On the last date of hearing, amicus curiae Anwar Kamal Advocate submitted that Nepra has not been properly constituted. He submits that in terms of Section 3 of the Act, Nepra consists of a chairman and four members but for the last two years it is functioning without a chairman and has only three members.
The annual report 2012-13 of respondent Nepra shows that one of the members namely Khwaja Muhammad Naeem, chairman (member tariff) is holding himself out as the chairman.
He submits that the said report has statutory importance in terms of Section 42 of the Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997 and has to be placed before the Council of Common Interests and before the federal government and the unlawful holding out of the said member as chairman of Nepra amounts to playing a fraud on the Act.
He further submits that question of subsidy even though appears to be in the larger interest of the public and shows a caring face of the federal government, grant of subsidy in reality is a disservice to the energy sector as it rewards inefficiencies of the Disco.
He submits that Rule 17 (3) (vii) and (x) provides that the government has to earmark the subsidy prior to the determination of the tariff by Nepra and no such subsidy was announced prior to the determination of current tariff. The policy of the Cabinet Division whereby the lowest tariff is accepted as a national tariff and the subsidies are worked out to fill in the difference in rates of the Discos, is not recognised by the Act and has no legal validity.
He submits that Discos should be allowed to maintain fair and free competition in terms of Article 18 of the Constitution so that they become efficient and come up with best rates possible rates.
The counsel for Nepra submits that the federal government is bound to issue notification in terms of Section 31 (4) of the Act and cannot await the outcome of the review application or reconsideration application made under the proviso to the said section.
The counsel for the respondent ministry submits that according to the Cabinet Policy (copy not placed on the record in spite of categorical assurance given to the court by the ministry counsel) it was decided that lowest tariff determined by the Nepra from amongst the aforementioned Discos will be adopted as a national tariff and the federal government will extend subsidies to other Discos to plug the difference in rates.
He submits that in pursuance of the same, subsidy has been worked out, however, the matter is awaiting inter-ministerial approval after which the matter will be placed before Nepra to revise the tariff and thereafter notification under Section 31 (4) of the Act will be issued.
On the last date of hearing Water and Power Joint Secretary Zargham Eshaque Khan submitted that the inter-ministerial approval is being delayed because the finance minister has gone for Umra with the prime minister.
He had, however, assured the court that notification under Section 31 (4) of the Act will be available today, however, neither the notification nor the joint secretary are available today.
The counsel appearing on behalf of the ministry submits that the said officer is busy in some important meeting in Islamabad.
The counsel for respondent ministry as well as Nepra submits that inter-ministerial approval followed by the review of tariff by Nepra is a mere secretarial exercise because the review of the tariff according to Syed Safeer Husain, the Nepra registrar, has to simply mention the amount of subsidy extended by the government and does not require any exercise of discretion or deliberation by Nepra.
The Nepra registrar confirms that the revised tariff has to simply reflect the amount of subsidy and will not change the rates determined by Nepra and is just a cosmetic act.
Faced with the above legal questions, the counsel for the respondent ministry seeks a short adjournment and submits that there is a strong likelihood that notification under Section 31 (4) of the Act will be issued by them.
The Nepra registrar submits there is no chance that such a notification is issued as the matter has yet to be placed before Nepra.
Published in Dawn, July 29th, 2014