The Caretaker federal government of Pakistan has recently made a pivotal decision to grant enhanced autonomy to regulatory bodies responsible for overseeing the energy sector. Notably, the National Electric Power Regulatory Authority (NEPRA) and the Oil and Gas Regulatory Authority (OGRA) will now have the authority to determine electricity and gas tariffs without requiring explicit approval from the government, marking a significant shift in regulatory dynamics.
This move aims to reduce government interference in the pricing mechanisms of essential utilities, namely gas, electricity, and petroleum products. The federal cabinet, through a circulated approval process, has endorsed amendments to the rules governing OGRA, NEPRA, and the Petroleum Division. Consequently, these regulatory bodies will be empowered to regulate prices independently, a departure from the previous practice of government involvement in tariff decisions.
In addition to granting more autonomy to NEPRA and OGRA, the amendments also introduce the establishment of appellate tribunals to address public grievances. This development signals a commitment to enhancing transparency and accountability in the regulatory processes, providing a platform for consumers to voice concerns and seek resolution.
However, the announcement comes on the heels of a separate decision by NEPRA to increase electricity tariffs by Rs7.5 per unit as part of the fuel price adjustment (FCA) for January 2024. This adjustment is expected to result in an additional burden of Rs66 billion on power consumers, excluding lifeline consumers and those served by K-Electric.
While the government’s decision to empower regulatory bodies reflects a broader strategy to streamline the energy sector and reduce bureaucratic hurdles, the concurrent tariff hike raises concerns about the immediate financial impact on consumers. Striking a balance between regulatory autonomy and consumer protection will be crucial as the energy landscape undergoes these significant changes.
