FOR a number of weeks at least, the issue of raising the funds to pay for the creation of a special CPEC security force, as well as the powers that the force will enjoy, has been in the news in various contexts. According to a series of reports last week, the matter of funding for the two divisions to be raised for CPEC security has been discussed by the finance minister and the army chief at a special meeting; it was then taken up as an extraordinary agenda item at an ECC meeting a few days later. Then the minister of water and power, who also holds the portfolio of defence, announced that funds to pay for the running of this force would be made part of the power tariff and recovered from all consumers countrywide. The latest reports suggest that the power regulator, Nepra, has objected to the proposal, saying it will set a bad legal precedent, and that the cost of security of private power plants is already a part of the tariff for the construction period, as well as insurance against sabotage once construction ends and commercial operations begin.
It is imperative that Nepra’s objections be heeded. It has become a bit of a fad to start bundling all manner of costs into the power tariff, almost turning the billing and recovery machinery of the power sector into a surrogate revenue system. We have seen pressure to include interest costs on the circular debt, as well as construction of the Neelum-Jhelum and the Matiari-Lahore transmission line and the cost of an LNG pipeline, in the power tariffs. This is clearly unacceptable and Nepra must not allow this process to continue.
If power consumers are going to be asked to bear the maintenance cost of a CPEC security force, they have a legal right to demand that all details about the proposed force and its costs be placed before Nepra for an open hearing, which then has the right to ask whether a least-cost approach is being adopted and where room exists to reduce the component costs further. Are the authorities, whether civilian or military, willing to live up to this obligation, which is binding in all power tariff determinations? If not, they should withdraw the proposal and seek to raise the resources from tax revenues instead. Power tariffs are not a substitute for the state’s revenue system. The proposal is grossly unfair to power consumers and of highly questionable legal merit. The government has done itself a disservice by hustling the proposal through an ECC meeting. It is also worth noticing that the matter of locating the resources for the proposed force is coming very late in the CPEC timeline. Should this not have been worked out at the outset?
Published in Dawn, September 27th, 2016