ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) on Monday rubber-stamped the government decision of imposing Rs3.82 per unit surcharge on electricity consumers across the country for four months with retrospective effect from March 1 and then continue it at a reduced rate of Rs1.43 per unit throughout the next fiscal year.

The additional surcharges have been imposed on the demand of the International Monetary Fund (IMF) to finance the debt servicing cost of the power sector and gradually reduce circular debt that stood at Rs2.6 trillion by end-December 2022.

During a public hearing last week, all four members and chairman of the Nepra, one after the other, had repeatedly questioned why should the regulator “rubber stamp” surcharges on consumers to finance power sector debt that emerged due to inefficiencies, bad governance and mismanagement of power companies and was not cleared by the regulator as “prudent cost” of electricity supply.

However, the regulator changed its stance based on the ‘legal opinion’ given by the Ministry of Law and Justice. The regulator said the law ministry had opined that “any surcharge will be charged and notified by the federal government in the official gazette.

The later part of section 31(8) provides for notification of such surcharge, the same will be included in the tariff, as determined by Nepra under the act ibid to be notified by the federal government. In the light of the foregoing, Nepra may consider the motion of the federal government, accordingly”.

“In view thereof, the authority has decided to allow the application of the surcharge to be recovered from different categories of consumers (of ex-Wapda Discos and K-Electric) for the period from March to June 2023 and for 2023-24, to cover the markup charges of Power Holding Ltd (PHL) loans”, the regulator ruled.

Under the order, the government will now issue a formal notification to charge 43 paise per unit surcharge on agricultural and residential consumers using up to 300 units. All other consumer categories including commercial, industrial, general services, bulk and others in the domestic sector above 300 units would be charged Rs3.82 per unit surcharge. There will be no difference among the consumers of ex-Wapda Discos and KE in the application of surcharge.

The total impact of surcharge in 2023-24 would thus stand at Rs335bn.

The regulator said with these additional surcharges, an additional amount of Rs75bn will be billed for the period from March to June 2023, against which around Rs68bn will be recovered at an expected recovery of 90pc.

Published in Dawn, March 7th, 2023