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K-Electric tariff

July 17, 2017


THE pandemonium that broke out at a recent hearing held by Nepra to decide on a review of its tariff for K-Electric will encourage those already opposed to public hearings to further justify their stand against consultation in such decisions. The noise and chaos that ensued when workers of two political parties — the PPP and the Jamaat-i-Islami — resorted to a shouting match led the chairman of the authority to abruptly end the hearing after an hour, saying “our legal requirement is fulfilled”. The two political parties have only themselves to blame: whereas the law calls for a public hearing, its purpose is not to create chaos but to hear the arguments and reasoning of those who are to be affected by the decision under consideration. The participation of political parties in such affairs should be welcomed, provided they have the brains amongst them to present reasoned arguments, and not to shout each other down. As it turned out, the pandemonium served no purpose whatsoever, other than cutting the hearing short and denying many others who may have had genuine arguments to make an opportunity to be heard.

Nepra did the right thing to ignore the pandemonium. Now it must do the right thing once again when deciding the tariff. And the right decision is the one that puts the public interest ahead of the private interests of the investor. K-Electric’s present management has skilfully presented its arguments in a way so as to argue that its interests are the public’s interest. Strictly speaking, whether or not the utility is able to finance future investments under a given tariff regime is of no interest to the consumer. It is a little disingenuous of private-sector parties to argue that their future revenues somehow embody a public interest. The tariff should indeed be performance-based, as the management is arguing, and not contain guaranteed returns, since the company’s business includes distribution, and it should be incentivized to raise efficiencies. That is where the revenues to pay for future investments should come from. When deciding the matter, Nepra must recall its role as the voice of the public interest, and keep that as its fixed point in the determination. Whether the present investors can offload their shares onto another purchaser under the new determination, or future investments for system upgradation should not be a matter to burden the public with.

Published in Dawn, July 17th, 2017

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