The government’s proposed amendments to the NEPRA Act will burden the unsuspecting ordinary consumers, who will be forced to pay annually an additional Rs 100 billion in power tariff, due to the massive haemorrhage in the state-controlled power sector due to corruption.
Background interviews with officials reveal that the PML-N government is being misadvised by some private sector experts, who have single-handedly managed the power sector, during the last eight years. After failing to reform the power sector, they are now suggesting taking on the regulator, National Electric Power Regulatory Authority (NEPRA), an official said adding that they were putting the entire blame of the rotting power sector on the regulator.
The amendments they are proposing will effectively end the autonomy of regulator. In simple terms, it means that the government will again have complete control over policy, administrative guidelines, investment terms and conditions, and above all the authority to determine power tariff. This will be similar to the anti-competitive and non-transparent environment of two decades back that called for reforming the power sector.
An official source said that IFIs have raised concerns over the amendments in the NEPRA act. They have expressed concerns over the non-inclusion of regulatory officials in the discussions over the amendments. The government has yet not addressed their concerns.
Who governs the power sector? In fact, nobody controls the state-owned power sector entities, which are governed under the corporate governance rules 2013. All entities are bound to have an independent board of directors, but they are filled with babus of the ministry of water and power and finance or their buddies.
As per the law, the board recommends a panel of three candidates to the Prime Minister to notify one as the Chief Executive. Under the PML-N rule, CEOs are never permanent, always on acting charge. CEO is never hired from the private sector, always brought in from the numerous state-owned power sector entities.
The state-owned companies have no CFO. They don’t have Chartered Accountants or MBAs and no international standard accounting system. The company accounts are maintained in Raj-era style ledgers. No HR department, consistent shortage of staff. No inventory control. No application tracking system and no consumer complaint redressal mechanism.
No government ever has done any performance evaluation of the power sector. The recommendations on reforms by IFIs are set aside on one pretext or the other, usually the political and union issues. Even no opposition party has sought answers why the government failed to induct a professional management, why SOPs were not implemented by the companies, why people were not held accountable.
Why NEPRA?
The power system is stymied in operational inefficiencies from the last many decades. The state-owned generation companies, transmission companies and distribution companies were always inefficient and yielded losses. Previously all the public sector losses were resolved by bureaucrats aka Ghulam Ishaq Khan on their desk, through simple calculations, raising the tariff by some paisa or one rupee per unit.
To address the crisis, NEPRA was set up under IFIs pressure during Nawaz Sharif’s second tenure. The objective was to unbundle the power sector, improve efficiency, reduce losses, attract private sector investment, increase generation and distribution at affordable rates and regulate the sector in a professional way.
