ISLAMABAD: Days after a staff-level agreement for the International Monetary Fund (IMF) programme revival, a parliamentary panel on Monday blocked a government bill seeking restoration of its powers to impose unspecified amount of surcharges on electricity consumers.

Through the bill, the government attempted to regain the powers for imposition of surcharge that had been withdrawn in 2017.

Almost all members attending the meeting of the National Assembly’s Standing Committee on Power, led by Chaudhry Salik Hussain, strongly opposed such “blanket powers” to the government.

Seeks plan being shared with IMF on circular debt management

The finance and power secretaries earlier explained to the committee that an amendment to the Nepra law would empower the federal government that in addition to the notified tariff, rates and charges determined by the regulator, to impose such surcharges on any or all categories of consumers at it may notify from time to time on each unit of electricity. The amount of such surcharges would be deemed as a cost incurred by the distribution companies (Discos) and included in the tariff, they said. The officials said such surcharges would be levied for funding any public-sector project to the extent decided by the federal government or fulfillment of any financial obligation of the federal government on account of electric power services.

They said the government had not yet made up mind about the size of surcharges but wanted to have “an enabling legislation” as one of the tools for rational financial management of the sector.

They told the parliamentary panel that an earlier amendment made in the Nepra Act in 2017 had withdrawn the government powers for surcharge and the government wanted to regain those powers to ensure nationwide uniform tariff and financing cost of circular debt.

While nearly all the members at the meeting opposed the “blanket powers” to the government, some questioned if the provincial governments had been consulted on the proposed legislation as surcharges would affect the people in all the provinces.

Provincial jurisdiction, CCI

Lawmaker Shazia Marri informed other members of the panel that in fact the Pakistan Peoples Party-led Sindh government had written letters to the Pakistan Tehreek-i-Insaf-led federal government to say that the matter should be discussed at the level of Council of Common Interests (CCI). It was done to ensure that consolidated recommendations of all the provinces could be referred to the parliament for legislation, particularly when electricity was part of the provincial jurisdiction under part-II of the Fourth Schedule of the Constitution.

Power Secretary Ali Raza Bhutta said it was firm stance of the federal government that legislative business was prerogative of the parliament and had nothing to do with the CCI while “policy business relating to electricity” belonged to the CCI and provinces.

After the strong reaction from the committee members, including those belonging to the ruling PTI and its allies, Finance Secretary Kamran Ali Afzal and Power Secretary Bhutta gathered around Chairman Salik and apparently explained the government commitments made with the IMF.

The committee told the government team that unless there was a clear trajectory of how the circular debt was going to end and how the power sector could become sustainable, the draft amendment bill would not be referred to the National Assembly for approval.

Mr Salik then explained to the committee that changes in the Nepra Act were crucial for the government, because of financial sustainability issues, therefore the committee should consider some give and take in the form of certain limitations on imposition of surcharge.

Rise in tariff

The two secretaries then offered to cap the maximum surcharge at 10pc of the average consumer tariff that works out at about Rs1.50 per unit at the existing average consumer rates of Rs14.85 per unit. This is slightly higher than Rs1.43 per unit tariff rationalization or equalization surcharge that expired recently but was previously used for uniform tariff.

Mr Salik then handed over a few recommendations to the government team as way forward and get back with the revised bill.

Published in Dawn, February 23rd, 2021