ISLAMABAD: The Senate Special Committee on Circular Debt was informed Monday that a delay in filing of tariff petitions by the power distribution companies (DISCOs) and their determination by the regulatory authority was one of the main reasons of increasing circular debt.
The committee, which met here under the chairmanship of Senator Shibli Faraz was informed by National Electric Power Regulatory Authority (NEPRA) Chairman, Tariq Sadozai that DISCOs had failed to file their tariff petitions with NEPRA.
He informed the committee that despite reminders during the year 2015-16, the petitions which should have been filed in January 2015 were received as last as February 2016, which was causing the delay in the determination of electricity tariffs by the regulator.
In addition to the delay in the filing of petitions, he said the situation further aggravates when the DISCOs approached courts for the resolution of tariff issues, causing further delays.
The committee was informed that for the year 2018-19, just a few tariff petitions were received by the authority till now.
It takes NEPRA four to eight months to determine tariffs as it has to follow a proper process by giving an advertisement followed by a public hearing.
On the occasion, some of the DISCOs suggested NEPRA reduce the determination time from 6-8 months to 2-3 months to speed up the price determination process.
Meanwhile, the chairman on the occasion clarified that the committee has been constituted to come out with the permanent resolution to the circular debt issue.
He said that the committee was consulting all the stakeholders to detect the actual problem behind the accumulation of circular debt.
He also asked the DISCOs to submit a report to the committee and inform it about the problems they have been facing in regulating the power sector.
The committee was further informed that as per policy, NEPRA allows 13 per cent technical losses, however, average losses by DISCOs have been recorded at about 18 per cent, which inflicts a tremendous loss of Rs80 billion per annum.
As per NEPRA, after allowing 13 per cent for technical losses, the companies should make 10 per cent recovery of the remaining 87 per cent electricity, which they failed and were recovering around 92 per cent.
On the occasion, the member of the committee expressed the view if thefts are controlled, it would help control circular debt.
Meanwhile, the committee also discussed the taxes imposed by the Federal Board of Revenue (FBR) on electricity.
The committee was informed that the FBR was imposing a tax on billing instead of on recovery amount which has been creating problems.
The committee also took notice of refund issues which the DISCOs claimed the board had failed to process since 2007.
Meanwhile, the water and power secretary informed the committee that the ministry in consultation with FBR had prepared a summary which has been sent to the
Economic Coordination Committee (ECC) for approval to streamline tax on electricity.
The committee was informed the government provided a subsidy of Rs85 billion last year on electricity while it approved subsidy of Rs150 billion for the current year.
