ISLAMABAD, March 8: The Ministry of Water and Power said on Tuesday that it would create an independent appellate body to hear appeals against decisions of the National Electric Power Regulatory Authority (Nepra) by amending the Nepra Act.

However, Nepra has termed the move an attempt for 'regulatory capture' in violation of the constitution. Speaking at a press conference here on Tuesday, Federal Minister for Water and Power Liaquat Ali Jatoi said the government would amend the 1997 Nepra Act to create an independent appellate body to hear appeals against decisions of Nepra to facilitate investors and keep power utilities financially viable.

The minister said the government wanted to bring more transparency in the power sector affairs and the appellate body, most probably headed by a senior judge, would be put in place to review Nepra decisions.

When asked why the government was not notifying Nepra decisions on power tariff reduction, the minister said the government took decisions after examining all aspects.

"We also want to reduce tariff but we want to make power companies viable as well, instead of making them bankrupt," he said. Nepra was the only forum whose decisions could not be challenged at a higher level unlike other courts, he said.

When reminded that the Nepra Act provided recourse to other courts of the country against any Nepra decision, Water and Power Secretary Ashfaq Mahmood and PPIB Managing Director Zafar Ali Khan said that the court proceedings normally took 10-12 years and were a hurdle in investment.

The officials said the idea behind the formation of an appellate forum was not to create a 'supra-regulatory body' or to undermine Nepra but to make the regulatory authority answerable to some higher forum.

They said as a result of recent Nepra decisions, the International Finance Corporation (IFC) had backed out of the privatization process of the Faisalabad Electric Supply Company (Fesco). The minister said he had already sent a summary to the prime minister and would meet him on March 25 to discuss the matter.

The power ministry officials said the government was not satisfied with the fuel-based tariff revisions of Wapda companies determined by Nepra early last month. "The calculations were not based on facts and companies would go bankrupt if implemented. We cannot act haphazardly," an official said.

Meanwhile, Nepra has reacted sharply to the move and said rules and regulations did not allow creation of an appellate body. "This is clearly an attempt of regulatory capture in violation of the constitution," said a senior Nepra official.

"This is strange that an agency is trying to regulate the regulator itself which is not only unconstitutional but also illegal," the official said. About the IFC backing out of Fesco deal, he said the corporation was quite disturbed over non-notification of tariff determinations which was delaying the privatization of Fesco.

He said taking into considerations IFC's concerns, the Privatization Commission through a letter on March 3, 2005, had asked the government to notify tariff determinations of Nepra without delay.