ISLAMABAD: The federal government on Friday conceded a provincial demand for continuing to finance flood-related capital works across the country, but could not achieve a consensus on amendments to the National Electric Power Regulatory Authority (Nepra) Act.

A meeting presided over by Water and Power Minister Khawaja Mohammad Asif and attended by the chief ministers of Khyber Pakhtunkhwa and Balochistan and representatives from Punjab and Sindh also agreed to have a national water policy after completing the consultative process.

Informed sources said the federal government used to finance capital works relating to flood protection under all the past programmes, but had asked the provinces last year to share the financial burden of such schemes under the Rs177 billion 4th national flood protection programme on the pattern of National Finance Commission shares, which was opposed by the provinces.

KP, Sindh opposed to some proposed amendments

“At least, the water and power ministry agreed that it would propose to the CCI (Council of Common Interests) to continue with the existing arrangement,” said an official, adding that the provinces had welcomed the proposed water policy and agreed to submit their formal views after consultations with the irrigation and chief ministers.

After the meeting, Khawaja Asif told journalists that another technical level meeting would be called shortly for proposed amendments to the Nepra Act which would then be taken up with the chief ministers.

He said it was the first meeting on the matter as directed by the CCI and there had been progress on it.

The minister said it would be premature to explain the proposed amendments, but “we are keeping in mind the interests of the provinces”. He said the meeting discussed the national water policy, amendments to the Nepra Act and the flood protection plan.

In reply to a question, KP Chief Minister Pervez Khattak said his government would not compromise on the provincial rights but was ready to take decisions in the national interest while protecting such rights. He said he had conveyed to the Centre his government’s reservations over the proposed amendments to the Nepra Act.

Balochistan Chief Minister Sanaullah Zehri said there had been an understanding on some issues and positive outcome would become public soon.

On the other hand, a statement issued by the water and power ministry said: “It was mutually agreed that the Nepra law would be amended” to ensure efficient and reliable power system and to improve the country’s energy security. “This would require modernisation of the regulatory framework, and developing Nepra into an institution which meets the highest standards of independence granted to electricity regulators globally,” the ministry added.

It said the representatives of the federal and provincial governments had agreed to the measures introduced for strengthening composition and regulatory powers of Nepra, including introduction of a better qualification criteria for the chairman and provincial nominees on the authority.

The ministry said it also proposed indemnities for acts done in good faith to strengthen decision making and independence of Nepra while empowering it with strong tools of regulatory enforcement, such as the power to undertake investigations and impose penalties for violations of the laws governing the electricity sector. These powers did not previously exist in the Nepra Act.

Moreover, in order to achieve the common objective of the federal and provincial governments to move towards a competitive electricity market regime, the power ministry said that “consensus was developed on de-licensing the generation sector while at the same time making provision for licensing in areas of trading and retail of electric power”.

The ministry said it also proposed an appellate tribunal headed by a former high court judge and comprising technical and financial experts to review Nepra decisions to reduce burden on high courts and provide independent, speedy and efficient relief to the people aggrieved by Nepra orders.

It was agreed that further discussions on the language of the draft would be held at a technical level meeting for consensus building on the text of the proposed amendments and to include proposals of the provincial governments.

The governments of KP and Sindh have been opposing such changes. KP told the Centre that de-licensing of the generation sector would have negative impact on its hydropower base because investors would opt for thermal generation having quick returns.

KP also called for protecting section 31 of Nepra Act that the Centre wanted to amend to reduce regulatory role. It argued that tariff determination was the core statutory tool of regulators throughout the world which should not be engrossed or compromised.

The province opposed appointment of Nepra members by the Centre and wanted continuation of the existing pattern of provinces nominating the members and the Centre selecting the chairman. KP also opposed the appellate forum to hear complaints against Nepra decisions, saying it meant creation of another layer of appeal. Instead, it proposed that the Constitution be amended to create a specialised tribunal with all powers of the high court for all regulators.

Published in Dawn, February 11th, 2017