ISLAMABAD: A parliamentary panel on Thursday resisted a government bill seeking powers to impose surcharge on electricity consumers required under the IMF deal, while the standing committee on finance unanimously cleared another bill for corporate restructuring of companies.
At a meeting of the Standing Committee of the National Assembly on Power, the secretaries of Power and Finance pleaded clearance of amendment to the Nepra Act (The Regulation of Generation, Transmission and Distribution of Electric Power (Amendment) Bill 2020).
Secretary Power Ali Reza Bhutta reiterated their previous position that they wanted powers to impose surcharge on electricity consumers for power sector development projects of national importance. Chairman of the committee Salik Hussain said they could not allow blanket powers for imposition of surcharges unless it was clearly specified on what kind of projects such funds would be spent.
MNA Saira Bano said the term ‘national importance’ was one of the most misused terms and hence the ‘projects of national importance’ could not be simply trusted for allowing unspecified amounts of surcharge.
Secretary Finance Kamran Ali Afzal said the decision whether to have a uniform tariff across the country or separate tariff for each distribution company was a policy domain and depends on the sociopolitical decisions of the government. He said the government was seeking powers to impose surcharge but this did not mean it was actually going to impose surcharge. Even if the government decides, the surcharge would not be applicable to small consumers, he added.
Mr Hussain and other members also raised questions over the build-up of circular debt beyond Rs2.3 trillion. They observed that the Circular Debt Management Plan (CDMP) needs transparency and clarifications with regard to the imposition of surcharge.
Mr Bhutta said an exclusive briefing could be given to the committee on the CDMP after it was presented to the Federal Cabinet. The secretaries of Power and Finance told the committee that the bill would empower the federal government, that in addition to the notified tariff, rates and charges determined by the regulator, to impose such surcharges on any or all categories of consumers as it may notify from time to time on each unit of electricity.
The amount of such surcharges would be deemed as a cost incurred by the distribution companies and included in the tariff, they said. The power secretary said such surcharges would be levied for funding any public-sector project to the extent decided by the federal government or fulfillment of any financial obligations of the federal government on account of electric power services.
The committee asked the ministry that public sector project of national importance be added and sought explanation of financial obligations vis-à-vis CDMP.
The chairman opined that ‘surcharges’ should be imposed only to finance specific developmental projects of national importance, for example, the on-going Diamer-Basha dam or any other such project in Azad Jammu & Kashmir and Gilgit-Baltistan in future to secure our water rights under the Indus Water Treaty with India, etc projects of strategic importance.
He said that even if surcharge is capped at 10pc of the base tariff, it would translate into Rs1.50 per unit and observed that power surcharges should not be allowed to pay for future circular debt. He said circular debt servicing should be budgeted elsewhere by Ministry of Finance and paid for through tax revenues.
On the suggestion of the committee a proviso was added that aggregate amount of such surcharges shall not exceed 10pc of the aggregate revenue requirement of all electric power suppliers owned or controlled by the federal government as determined by the regulator. The committee then deferred the bill for the next scheduled meeting.
Corporate restructuring bill cleared
Meanwhile, the National Assembly’s Standing Committee on Finance led by Faiz Ullah unanimously recommended that the Corporate Restructuring Companies (Amendment) Bill 2020 may be passed by the NA.
The bill seeks to improve institutional arrangements and legal processes for revival and rehabilitation of distressed entities which are considered time consuming at present. The existing corporate restructuring companies law also lacked provisions to facilitate corporate restructuring for smooth operations.
Published in Dawn, March 5th, 2021