ISLAMABAD: Amidst a divided house, the National Electric Power Regulatory Authority (Nepra) on Wednesday allowed an increase of 48 paisa per unit in the average electricity tariff for ex-Wapda distribution companies (Discos) for 2015-16.

However, Nepra unanimously rejected a series of demands by the government that would have an additional burden of more than Rs225 billion on consumers or additional revenue for Discos on account of higher losses, non-recovery of bills, late payment surcharge etc.

Member Tariff Himayatullah Khan, however, gave a dissenting note on a majority decision of Nepra, which allowed about Rs24.34bn to the distribution companies on account of the write-off of unrecovered amounts from chronic defaulters.

The majority decision translates into the increase of 48 paisa per unit in the tariff even though its applicability on consumers would be subject to the government’s decision on subsidy.

Private receivables of ex-Wapda Discos were over Rs318bn in 2016

Mr Khan opined that even if write-offs were allowed, this should be first approved by Discos’ boards of directors, which resisted waiving non-recoveries on the premise that the move would encourage further defaults. Mr Khan said the write-offs would further facilitate and reinforce the rampant inefficiencies within the system and put an upfront burden on consumers.

These write-offs included Rs15.75bn by Peshawar Electric Supply Company, Rs2.85bn by Lahore Electric, Rs2.06bn by Hyderabad Electric, Rs2.01bn by Sukkur Electric and Rs1.37bn by Multan Electric. Such write-offs by Gujranwala Electric and Faisalabad Electric stood at Rs149 million and Rs161m, respectively.

The average tariff for Discos was estimated at Rs11.38 per unit. An official explained that the tariff determined by Nepra did not include the impact of Rs48bn on account of net hydel profit that would push the rates up, but was currently held up due to legal complications.

The regulator did not agree to the government’s directives for building higher system losses in the tariff and not treating 100pc recovery of bills and allowing some other inefficiency factors under the 2013 power policy.

It observed that the 2013 policy stipulated improvement in recovery and collections by ex-Wapda Discos through minimising inefficiencies, privatisation and creating independence.

It also directed punishing private defaulters. It proposed disconnecting electric connections of defaulters after 60 days of non-payment. It called for reconnecting such connections to the grid with pre-paid meters besides observing loadshedding in high-theft and low-collections areas.

The regulator noted that private receivables of ex-Wapda Discos were over Rs318bn, including running defaulters of Rs250bn, for more than three years in 2016. This meant that the federal government, which is the owner of the distribution companies, was itself not complying with the policy.

Nepra had earlier determined the tariff in February 2016 for 2015-16. But Discos and the government kept on delaying the notification, sought a review of Nepra’s determination and then challenged it in court, which ordered that the determination should be reconsidered.

Published in Dawn, September 21st, 2017