Power Generation Contracts
ISLAMABAD: The National Electric Power Regulatory Authority (NEPRA) has urged the government to take serious steps to rectify power generation contracts in order to alleviate public concerns amid widespread outcry over a potential tariff increase of up to Rs7.12 per unit.
In a recent public hearing chaired by NEPRA Chairman Waseem Mukhar, concerns were raised about last month’s overbilling by distribution companies due to changes in the meter reading mechanism, involving ‘pro rata’ adjustments. NEPRA has initiated a detailed investigation into these billing discrepancies.
Representatives from the power division and its subsidiaries informed the hearing that the average tariff for the current fiscal year is expected to be lower than the previous year’s, attributing this to fewer quarterly tariff adjustments and monthly fuel cost changes.
They mentioned the government’s provision of a Rs50 billion subsidy for three months to benefit residential consumers using up to 200 units per month, although the formal notification of this relief was pending.
The public hearing witnessed strong criticism from various consumer categories across the country, including Karachi, regarding the proposed up to 51% hike in the national average tariff.
Even the export sector voiced concerns about tariff competitiveness compared to regional standards, despite the government’s claim of reducing tariffs by Rs155 billion this fiscal year.
NEPRA’s tariff member, Mathar Niaz Rana, highlighted inefficiencies in power generation, emphasizing the need for a thorough examination of operations by independent power producers (IPPs) and generation plants.
He stressed the importance of addressing operational efficiencies, including working capital requirements and insurance costs.
Regarding recent complaints of overbilling through the pro rata application of units, NEPRA’s member for consumer affairs, Rafique A. Shaikh, disclosed that an investigation team had been formed to scrutinize data maintained by the Power Information Technology Company. This team is currently analyzing the sensitivity of 60% of the accessed data to address consumer complaints.
NEPRA Chairman Mukhar refuted accusations that the regulator was merely endorsing government tariff hikes without scrutiny. He noted that NEPRA had reduced the proposed tariff increase from Rs8.33 per unit to Rs5.72 per unit through careful deliberation and adjustments.
In conclusion, NEPRA emphasized the need for significant reforms in the power sector to enhance efficiency and accountability, urging the government to implement measures that restore public confidence and ensure fair billing practices.
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