Nepra reveals its error has taxed Karachiites heavily
ISLAMABAD: It may have been an ‘inadvertent error’ but has penalised the electricity consumers in Karachi heavily for over three years in the shape of higher monthly bills and resulted in an unquantifiable build-up in circular debt being paid out of public money.
The National Electric Power Regulatory Authority (Nepra), responsible for determining tariff for consumers, has admitted that it made an “inadvertent error in the schedule of tariff” for Karachi Electric Supply Company while fixing rates for July 2009-March 2010 to January-March 2012 and issued a corrigendum to correct its mistake.
It will, however, perhaps take months and years to fully refund money charged extra from consumers and reconcile power sector subsidies, provided the Karachi-based privatised power utility does not go into litigation. It announced a first-ever profit of Rs2.6 billion for the year ending June 30, 2012.
The subsidies paid to Wapda companies and the KESC, according to the finance ministry, have crossed Rs1.4 trillion in four years.
An official at the ministry of water and power told Dawn that initially over-charging from consumers in Karachi has been estimated at Rs4.2bn for July 2009-March 2010 but a detailed exercise was required for the examination and verification of accounts and subsidy payments to determine the actual amounts.
“The official said that perhaps the time had come to have a special audit of the power sector accounts and subsidies. Water and Power Secretary Nargis Sethi and spokesman Zargham Eshaq Khan were not available to comment.
“Due to inadvertent error in the schedule of tariff (SOT) enclosed with the aforesaid decision of the authority, the effect thereof
has also been carried forward in the subsequent SOTs issued up till the quarter Jan-March 2012”, Nepra said. Taking note of the error, Nepra had “issued a corrigendum to rectify the error in the said SOTs,” it added.
The regulator asked the ministries of finance, privatisation and cabinet division that “the amount of tariff differential subsidy already paid by government of Pakistan to KESCL may be adjusted in view of the abovementioned revised SOTs for the
KESC UNHAPPY: A spokesman for the KESC, which apparently has been the main beneficiary of the episode, challenged the corrigendum and said it had not been consulted or given an opportunity of being heard before reaching the conclusion.
It said that according to Nepra’s determination for July 2009-March 2010, the KESC’s tariff schedule had to be adjusted by a Rs2.79 per unit increase for all categories, except lifeline consumers.
However, the SOT with the determination ‘inadvertently adjusted’ for four consumer categories and the effect was carried forward in the subsequent SOTs up to the January-March 2012 quarter. It pointed out that the first 100 units for domestic consumers were erroneously charged at Rs3.33 per unit, 100-300 units were Rs2.99 higher, followed by Rs3.19 for 300-700 units and Rs2.67 for agricultural consumers during July 2009-March 2010. The erroneous extra charge kept on compounding the bills for nine subsequent quarters from April 2010 to June 2012.
Nepra Registrar Syed Safir Hussain a corrigendum had been issued for the error that played havoc with consumers and the federal budget for almost four years.
He said the error had come to light during an internal examination of a different case. He said the mistake had been carried forward but the exact revenue impact was not readily available and would need to be worked out on the basis of rates for each consumer category and the total units of electricity each category consumed.
He said the government worked out the amount of subsidy on the basis of cost of electricity determined by Nepra and hence the impact of the difference would have to be examined on the basis of tariff differential subsidy. He confirmed that error had
kept on compounding the rates all along in the subsequent quarters.
Finance Ministry’s Adviser Rana Asad Amin said the tariff of distribution companies determined by Nepra was verified by a special cell of the chief engineering adviser’s office of the water and power ministry. “The ministry of finance simply pays the differential subsidy verified by the chief engineering adviser,” he said, adding the payments were then forwarded to the auditor general for routine audit.
KESC spokesman Aminur Rehman said the utility had received the Nepra notification on Nov 26, claiming an inadvertent error in the calculation of tariff, which was quite surprising since the decision had been taken unilaterally and arbitrarily.
He said Nepra was required under the law to consult the KESC before reaching a final decision because the rates
had been in force for long under the authority’s own notifications.