ISLAMABAD: The National Electric Power Regulatory Authority (NEPRA) has deferred its decision on the proposed increase in security deposits sought by the power distribution companies (DISCOs) until a comprehensive audit of existing security deposits is completed.
NEPRA conducted a public hearing on Tuesday to consider the petition filed by DISCOs for revision of security deposit rates. NEPRA members, including Rafique Ahmad Shaikh, Mathar Niaz Rana, Amina Ahmed, and Maqsood Anwar Khan, attended the hearing.
While expressing dissatisfaction over Discos’ arguments, the power regulator criticised the distribution companies for shifting the financial burden of their operational inefficiencies onto consumers.
Eight power distribution companies, including Peshawar Electric Supply Company (PESCO), Multan Electric Power Company (MEPCO), Gujranwala Electric Power Company (GEPCO), Lahore Electric Supply Company (LESCO), Faisalabad Electric Supply Company (FESCO), Hyderabad Electric Supply Company (HESCO), Quetta Electric Supply Company (QESCO), and Tribal Areas Electric Supply Company (TESCO), submitted their requests to NEPRA to increase security deposits.
NEPRA emphasized that any increase in security deposits would be implemented uniformly across the country under a standard tariff structure. It directed K-Electric (KE) and the Sukkur Electric Supply Company (SEPCO) to submit similar petitions.
The proposal to raise security deposits has faced strong opposition from various stakeholders including industrialists and business leaders. The All Pakistan Textile Mills Association (APTMA), the Lahore Chamber of Commerce and Industry, and the Karachi Chamber of Commerce have rejected the increase, arguing that it stems from the DISCOs’ mismanagement and inefficiencies.
It is important to note a significant concern raised during the discussions was whether the proposed increases would apply to mosques and military installations. Similarly, the proposed hike would affect all existing users. Furthermore, it was suggested that payments for the increased security deposits be collected in installments.
Mathar Niaz Rana, NEPRA’s Member (Tariff), raised alarms about the authenticity of current deposit rates and said that NEPRA’s audit team had already identified discrepancies in deposits across three of the DISCOs.Â
He said that there are also concerns within NEPRA that raising security deposits could inadvertently push more consumers towards alternative energy solutions, such as solar power, thereby reducing demand and revenues for the DISCOs. And, Irfan Butt from GEPCO acknowledged that this shift to solar energy could further dampen consumer demand.
The representatives from the Karachi Chamber of Commerce and Industry (KCCI) voiced particular concern over the proposed increase, especially for industries. Tanveer Barry pointed out that the security deposit increase—from Rs 2,010 to Rs 54,783—would be an unbearable financial burden for businesses, forcing them to consider alternative energy sources, such as solar, to mitigate costs. He said that the security deposit increase was an attempt to justify inefficiencies by imposing higher costs on consumers.
Aamir Sheikh, a representative from the industrial sector, highlighted that industries would face financial strain due to the proposed increases. He underscored the challenge of paying Rs 25-30 crore in additional security deposits, suggesting that such a move would further burden an already struggling industrial sector.Â
Sheikh emphasized that these funds, if available, would be better utilized in expanding industry and creating jobs rather than covering DISCOs’ inefficiencies.
As the hearing concluded, NEPRA’s Member (Technical), Rafique Ahmad Shaikh, clarified his stance, stating that without concrete assurances of improved service, including an end to the 10-15 hours of load shedding, NEPRA would not approve the proposed hike in security deposits. He also emphasized that the authority would await the final audit report from its team before making a decision.
