The National Electric Power Regulatory Authority (Nepra) is under pressure as numerous petitions strongly oppose the proposed 400% increase in security deposits by Power Distribution Companies (Discos).
The business community, including key associations and chambers like APTMA, KATI, PLGMEA, PVMA, KCCI, FPCCI, and BQATI, has raised objections to the move and has requested an audit of the amounts consumers have already deposited.
These associations have approached Nepra to formally raise concerns over the proposed increase, with some also reaching out to the Power Minister and other decision-makers to review the proposal. Discos such as GEPCO, LESCO, MEPCO, PESCO, HESCO, FESCO, TESCO, and QESCO have requested substantial increases, citing significant tariff hikes across all consumer categories, and arguing that the current security deposit rates are insufficient to protect against potential defaults.
Nepra has scheduled a public hearing on February 12, 2024, and has requested feedback from stakeholders regarding these petitions.
The Pakistan Leather Garments Manufacturers and Exporters Association (PLGMEA) has voiced concerns over the proposed changes, highlighting several negative consequences for both industry and the broader economy.
“The excessive financial burden on consumers, including manufacturers and exporters, who are already struggling with rising production costs, will negatively impact industrial competitiveness,” PLGMEA stated. “This will discourage expansion and counter government initiatives aimed at promoting economic growth and increasing exports,” it added.
The association also criticized the lack of transparency and logical justification in the proposed deposit structures, raising concerns over the arbitrary nature of the policy.
PLGMEA has requested Nepra to decline the petition and direct Discos to focus on improving revenue collection efficiency rather than imposing additional financial burdens on consumers.
In his petition, intervener Arif Bilwani argued that the Discos’ request to set security deposit rates at one percent of the land value, based on the rates fixed by the FBR, is impractical and unreasonable. Bilwani pointed out the vast disparities in land values across cities like Lahore and Karachi, citing examples from both cities.
For instance, in Lahore’s Shah Alam, the per marla value is Rs. 10,720,100, while in areas like Edgerton Road and Ahbab Colony, values vary significantly.
Bilwani further noted that the proposed security deposit calculation would lead to an unreasonable amount for consumers, with a potential deposit of Rs. 1,237,500 for a consumer in Karachi’s Army Officers Housing Scheme. “Such exorbitant security deposits are unaffordable for paying consumers, especially under the guise of mitigating the risk of default,” he added.
He also criticized Discos for failing to provide category-wise data on defaulting consumers, which is essential for a fair assessment of the need for higher deposits. “The number of defaults among industrial and A-3 consumers is negligible, while most defaults occur among single-phase consumers,” Bilwani said, adding that Discos are resorting to “arm-twisting tactics” against paying consumers.
Bilwani concluded by urging Nepra to reject the petition, calling it impractical, discriminatory, and against paying consumers. He emphasized that the petition should be dismissed in its entirety.
