A dissenting member of the National Electric Power Regulatory Authority (Nepra) has challenged the approval of the National Grid Company’s (NGC) Rs. 332 billion revenue requirement. She argued that inconsistencies in the accounting methodology reduced the transmission company’s permissible return.
Member (Tariff and Finance) Amina Ahmed raised the objections in a dissenting note. The note followed Nepra’s 2-1 decision on the company’s multi-year tariff determination.
Ahmed questioned the treatment of more than Rs. 19 billion payable to the Central Power Purchasing Agency (CPPA). According to her, the majority classified the amount as a loan while calculating NGC’s equity base.
Dissent Challenges Accounting Methodology
Nepra recently approved a combined revenue requirement of Rs. 332 billion for NGC, formerly the National Transmission and Despatch Company (NTDC). The approved amount covers FY2022-23 to FY2024-25 under the multi-year tariff framework.
However, the approved figure remained significantly below the Rs. 478 billion requested by the company.
The regulator allowed Rs81.5 billion for FY23, Rs. 95.6 billion for FY24 and Rs. 155 billion for FY25. Additionally, it approved use-of-system charges of Rs. 382 per kilowatt monthly for FY23, Rs. 455 for FY24 and Rs. 710 for FY25.
Amina Ahmed Raises Concerns Over CPPA Liability
Ahmed said the Rs. 19 billion payable to CPPA originated from the 2015 Business Transfer Agreement. Under that agreement, NGC transferred market operation assets and liabilities to CPPA.
She argued the liability has a matching receivable representing assets excluded from the transfer. Therefore, both balances should receive identical accounting treatment.
According to Ahmed, recognising only the liability while excluding the corresponding receivable artificially reduces NGC’s equity base. Consequently, the company receives a lower permissible return under the tariff determination.
She also argued that Nepra’s methodology calculates current assets and liabilities using standard formulae instead of actual balance sheet figures. Therefore, she maintained that the CPPA payable should not be treated as long-term financing.
Ahmed said Nepra should either net off both balances or exclude both. Otherwise, the approach distorts NGC’s financial position and produces an inaccurate tariff determination.
