NEPRA, Govt under fire over proposed Rs7.50 per unit power tariff hike

ISLAMABAD: The National Electric Power Regulatory Authority (NEPRA) and the government faced severe criticism during a hearing on the proposed increase in base power tariff by up to 7.5 rupees per unit.

The stakeholders, especially those representing the export-oriented sectors and industries, raised objections over the massive tariff hike and questioned the government’s implementation of cross subsidies without thoroughly assessing its impact.

During the hearing, NEPRA and the Power Division received scathing remarks for allowing the installation of several Independent Power Plants (IPPs), which increased the country’s capacity to 45000 MW without investing in the transmission and distribution network. Intervenors, particularly representatives from the textile sector and other industries, pointed out that despite these plants producing a maximum of 26000 MW, consumers were still paying capacity payments for the remaining idle power plants.

The motion filed by the federal government to increase electricity prices by 7.5 rupees per unit prompted the hearing. The Power Division justified the proposed increase, citing rupee depreciation and capacity payments as the main reasons, but NEPRA officials emphasized that the specific increase for each slab is the government’s political and administrative decision.

During the hearing, Member NEPRA, Rafiq Shaikh, questioned the legality and rationale behind the government’s subsidies allocation and demanded transparency in determining the subsidy amount for each slab. The Power Division officials clarified that the government would grant a subsidy of 158 billion rupees to electricity consumers, exempting consumers using up to 200 units from any increase. They further explained that 40 percent of consumers in the country living below the poverty line would receive subsidies, covering 90 percent of all consumers.

Representative Tahir Basharat Cheema from APTMA raised concerns about the potential impact of even a one percent tariff increase on exports and highlighted that commercial and billboard operators receive a commercial tariff. He expressed that a switch to alternatives would incur a cost of 300 rupees per unit. Cheema also questioned the power companies’ resorting to load shedding and sought accountability for the burning of 22 thousand meters of electricity during recent rains.

Member NEPRA, Rafiq Shaikh, emphasized the need for the Power Division to present an economic case justifying the subsidies for electricity consumers, voicing concerns about its potential impact on the industrial sector.

Following the hearing, NEPRA reserved its decision on the proposed power tariff hike. The decision will be forwarded to the federal government for review, and upon approval, a notification will be issued to implement the tariff increase.

In response to the proposed tariff hike, Jamaat-e-Islami Karachi Amir Hafiz Naeem-ur-Rehman rejected the increase and accused NEPRA of following the government’s instructions.

He argued that the proposed hike would burden the urban population and regular electricity bill payers, further lamenting that the public is bearing the brunt of the government’s inefficiency.

Naeem ur Rehman criticized NEPRA for not taking decisive action against Independent Power Producers (IPPs) despite their agreements being detrimental to the country’s economy and people.

He accused NEPRA of acting under the instructions of the cabinet, making the hearing seem futile and merely an attempt to save face.

He argued that the subsidy itself represents inefficiency in the government’s management of power plants and distribution companies, leading to hardships for the public.

The Chairman of the National Electric Power Regulatory Authority (NEPRA) voiced disappointment at Naeem’s refusal to accept past invitations for collaboration.

The discussion revolved around the rising electricity tariffs and K-Electric’s provisional license renewal.

Naeem directed criticism at NEPRA for their approach, particularly in Karachi.

He further emphasized the predicament facing Karachi: without K-Electric’s license renewal, the city would be left without a viable alternative for electricity provision, as no other power distribution license applications have been received to date.

The industrialists from Karachi also rejected proposed increase in electricity rates and said that Karachi was contributing 42 percent in revenue but electricity rates for industries were being increased that would hit the industrial sector.

The criticisms during the hearing shed light on the prevailing challenges faced by NEPRA and the government in addressing the power tariff issue.

The hearing brought to light the complexities and challenges faced by NEPRA and the government in addressing the power tariff issue. The final decision on the proposed hike will have far-reaching implications for consumers and the energy sector, urging authorities to carefully assess all aspects before reaching a verdict.