Govt gets cleared Nepra bill to revive IMF programme

Published March 12, 2021
At current average tariff, the government can now impose about Rs1.5 per unit additional surcharge. — AFP/File
At current average tariff, the government can now impose about Rs1.5 per unit additional surcharge. — AFP/File

ISLAMABAD: After months of resistance by the opposition in a parliamentary committee, the government on Thursday got cleared through majority vote a bill empowering it to impose surcharges on electricity consumers to meet another ‘prior action’ for revival of the International Monetary Fund (IMF) programme.

Under the bill, which will now go to the National Assembly for approval, the government has secured powers to impose up to 10 per cent of the average electricity tariff on consumers. At current average tariff, the government can now impose about Rs1.5 per unit additional surcharge to cover the cost of inefficiencies and losses.

“The Regulation of Generation, Transmission and Distribution of Electric Power (Amendment) Bill, 2020” — commonly known as Nepra Act — has been pending before the National Assembly’s Standing Committee on Power for over six months and is one of the pre-conditions for revival of the IMF programme paused since February last year.

The committee’s meeting was presided over by Chaudhry Salik Hussain of the Pakistan Muslim League-Quaid. Five members of the committee gave votes in favour of the bill, including Sher Akbar, Amir Dogar, Saif-ur-Rehman, Lal Chand Engineer and Sabir Hussain Qaim Khani. Those who opposed the bill included Shazia Marri, Saira Bano, Ghulam Mustafa Shah and Riaz Hussain Pirzada.

The opposition members were sceptical on the definition of surcharge and viewed it uncalled for burden on the masses and hence the bill should not be cleared.

Chairman Salik Hussain reiterated that “surcharges” should be imposed only to finance specific developmental projects of national importance, for example, the ongoing Diamer-Bhasha Dam or other projects of strategic nature in AJK and Gilgit-Baltistan in future to secure water rights under the Indus Water Treaty.

“Even if surcharge is capped at 10pc of the base tariff, power surcharges should not be allowed to pay for future circular debt which should be budgeted elsewhere by Ministry of Finance and paid for through tax revenues.”

Power Secretary Ali Raza Bhutta said the National Electric Power Regulatory Authority sought powers to impose surcharge on power consumers by amending Nepra Act, but that did not necessarily mean that surcharges were on the cards. He said the surcharge would have to be approved by the prime minister and the cabinet and would be utilised against capacity purchase payments. Maximum surcharges will be levied up to 10pc of electricity cost to meet the required revenue, he added.

Shazia Marri said the people were already facing the brunt of expensive electricity owing to inefficiencies of the system and failure of the government to address them. She opposed the bill, saying the consumers should not be punished for the weaknesses of the power sector.

Energy Minister Omar Ayub Khan said the proceeds from power surcharges would also be spent on power projects. These surcharges would be levied only if approved by the federal cabinet, he said.

Syed Ghulam Mustafa Shah wondered why there was a need for more surcharges when electricity was already very expensive.

“Why don’t you speak directly that imposition of surcharges is a condition of IMF,” said Saira Bano.

Finance Secretary Kamran Ali Afzal said the government shared its reform programme with the IMF and was not imposed by the government and added that there would be no surcharge on small power consumers. He said circular debt had reached Rs2.3 trillion and “if we do not resolve these issues today, the economy will sink tomorrow”, he said.

Omar Ayub said the country would have to move from oil to cheap sources for power generation and blamed the previous governments for expensive electricity generation. He said the bill once approved by parliament would enable the government to invest in the infrastructure and other obligations, eventually benefiting consumers as being relieved of high price of electricity with the betterment in the infrastructure and lowering of circular debt.

The power secretary said electricity losses would be reduced by 2.2pc over the next two years and recoveries would be improved by 5.6pc to at least 96pc.

Published in Dawn, March 12th, 2021

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