ISLAMABAD, Jan 26: Overruling cabinet division's objections, Prime Minister Shaukat Aziz has formed a five-member committee to examine and redefine the role of the National Electric Power Regulatory Authority (Nepra) to make the organization investor-friendly, it is learnt.

The committee, led by Minister for Water and Power Liaqat Ali Jatoi, would comprise chairmen of Nepra and Wapda, managing director of the Private Power and Infrastructure Board (PPIB) and a representative of the finance ministry, a finance ministry official told Dawn.

The government issued a notification to this effect on Wednesday, asking the committee to submit its recommendations within a month, the official said. The body would review the tariff rules and prospects of investment and impact of Nepra.

The premier constituted the committee after a series of complaints of the PPIB that the Nepra's rigid stance on various power sector issues was hampering new investments in the country at a time when the country was faced with an estimated power shortage of about 2,000mw.

Nepra has denied these charges at various meetings and claimed that some powerful market players and stakeholders were trying "regulatory capture" to advance their narrow objectives.

The sources said the cabinet division, which is administrative head of Nepra, had objected to the nomination of the power minister as head of the committee and giving majority representation to the power sector agencies like the PPIB, Wapda and the power ministry.

The authority had also proposed that the minister for privatization should be the head of the body and representation of various stakeholders on the committee should be equitable. But the prime minister had overruled the objections, the sources said.

Sources in the power ministry said the power sector was again heading towards a severe crisis which might hit economic growth and investor confidence. In a recent communication to the prime minister, the board of directors of the PPIB said: "This uncertainty and non-adherence to the 2002 (power) policy (by Nepra) could unfortunately result in serious power shortages in the country by 2006-07".

There is a wide gap between the perceptions of the government and Nepra on at least five fundamental issues of the power sector restructuring which is aimed at creating a competitive market structure.

A number of sponsors, who have received letters of intent (LoI), are exerting pressure on the PPIB to provide Standard 1 security package agreements each involving an implementation agreement, a power purchase agreement and a fuel supply agreement.

The PPIB said there were 'major differences' between Nepra's proposed market structure which envisions certain fundamental aspects. The power ministry says Nepra is not giving due consideration to the ground realities of the power sector.