CPEC security cost

Updated March 22, 2017

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It was always a bad idea to bundle the cost of security for the China-Pakistan Economic Corridor enterprise into the power tariff and pass it on to the consumers.

Now that the federal cabinet appears to have approved the decision, it falls on the tariff-setting power regulator, Nepra, to ensure that the rights of the consumers are protected against spurious items being added to their bills.

Nepra has taken suo motu notice of the matter and called a public hearing on April 4 to which all members of the public and other stakeholders are invited. This is a good opportunity for all civil society groups to register themselves as participants, as per the details available on the Nepra website, and submit comments and feedback on the proposal.

It is tempting for the government to add all manner of power-sector expenses, for which there is no room in the budget, to utility bills, but this temptation must be strenuously resisted.

Power bills are not surrogate revenue machinery. In this case, the total cost added to the bills will amount to 1pc of the capital cost of all projects per annum, which comes to roughly $155m going by the figures given by Nepra. The amount may not sound much at the moment, but it should be borne in mind that this figure will inevitably rise over time as the number of power projects increases.

With the passage of time, it is entirely reasonable to expect that the percentage being asked for will also increase, and other unanticipated costs will similarly be added to the bills. CPEC security is undoubtedly an important matter, but costs should be kept within the budget, and not billed to power consumers.

The proposal is yet another example of how the government has failed to properly forecast the costs it is to bear under the CPEC umbrella, and one can only wonder what other unanticipated expenses are going to arise as the projects move towards commercial operations.

Published in Dawn, March 22nd, 2017