ISLAMABAD: As a fallout of the 18th Amendment, differences have emerged between the federal and provincial governments over the power to fix electricity tariff, challenging the very existence of the National Electric Power Regulatory Authority (Nepra).
This has happened at a time when the centre is working with international lenders to empower Nepra to determine and notify tariffs directly in order to end the government`s political role in fixing power rates, which is blamed for obstructing full cost recovery and resulting in the energy sector`s circular debt.Following a serious debate, an inter-provincial committee of ministers decided on Tuesday to refer the matter to the Council of Common Interests (CCI) after submission of proposals by all the provinces, Nepra and the ministry of water and power within 15 days. The CCI is likely to take up the issue at its next meeting scheduled for June 15.
Under Clause 157 of the amendment, provinces have been empowered to set up power plants of any capacity and “determine the tariff for distribution of electricity within the province”. In case of a dispute between the federal and provincial governments, the matter is to be resolved by the CCI.
Minister for Water and Power Syed Naveed Qamar, who presided over the meeting, asked the provinces to suggest a mechanism to set up a power regulatory system at the provincial level. The proposal will be submitted to the CCI for approval. According to sources, the meeting discussed if Nepra should have any role in granting licences and setting tariff for electricity produced by the provinces from new plants.
Almost all the provinces took the position that provincial governments should be responsible for setting up the plants and selling electricity to distribution companies operating in their areas at tariffs approved by them, without any role of Nepra.
It was pointed out that the Khyber Pakhtunkhwa government had filed a case in the Peshawar High Court challenging Nepra`s authority to fix tariffs.
All provinces said Nepra`s role should be reduced and tariffs should be set by them.
The Punjab government, however, took a slightly different view. It said investors should be free to seek tariff approval either from Nepra or the provincial government concerned while investing in any province.
According to the sources, Nepra Chairman Khalid Saeed said the authority had been set up in 1997 under a decision of the CCI, through an act of parliament and given the power to fix tariffs for the whole country, except disputed territories.
He said Nepra`s members were drawn from all provinces on the recommendations of the provincial governments to jointly and individually look after provincial and federal interests while creating a balance between the interests of consumers and investors.
He cautioned the provincial governments against being sentimental on the issue of electricity tariff, saying they were inherently not in a position to protect the federation`s interest and letting them to fix tariffs would destabilise the entire sector and national economy.
The sources quoted Sindh Power Minister Shazia Marri as saying that the provincial governments had been given the authority under the Constitution and there was no reason that they should not exercise it. In the event of a dispute, the federal government could be consulted and guidance and technical advice sought from Nepra, she said.
She insisted that the distribution companies should be under the provincial framework.
The province where a power project is set up will have all the rights to fix tariff and sell electricity to the distribution company whose income will belong to the provincial government. The distribution companies will only pay federal taxes on electricity to the centre.
Federal Minister Naveed Qamar said all regulatory authorities and the subject of electricity had been clearly defined in the Constitution and the CCI was the forum for resolution or interpretation of a matter by any aggrieved government.