3 Surcharges Re-imposed on Power Users – Research Snipers

3 Surcharges Re-imposed on Power Users

In accordance with the commitment, the National Electric Power Regulatory Authority (NEPRA) made with the International Monetary Fund (IMF) on Wednesday permitted the federal government for re-imposing three surcharges on the electricity consumers.

The three surcharges amount to Rs 1.55 per unit would be charged to the power users paying their electricity bills on a regular basis to finance Rs 110 billion worth of theft, non-recovery of power firms and system losses.

While permitting the surcharges, the regulator observed that it cannot do anything as this surcharge implication is under the law to permit them as instructed by the federal government under the section 31(5) of the NEPRA law, however, said that the current tariff would remain the same.

The two surcharges include the Neelum-Jhelum Surcharge at a rate of ten paisa each unit, targeted to produce about Rs 7.5 billion per annum and the Financing Cost Surcharge at a rate of forty-three paisa per unit, for ensuring the collection of Rs 30-32 billion for debt servicing of the Power Holding Private Limited.

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The third surcharge named the Tariff Rationalisation Surcharge, imposed at an average rate of Rs 1.02 per unit is meant for the reduction of the overall power subsidy on the budget and for keeping the tariff uniform throughout the nation via cross-subsidy. This would be varying from the distribution company to distribution company and produce about Rs 40 billion per annum.

The regulator confirmed that the Lahore High Court (LHC) has called these surcharges unconstitutional on the 29th of May 2015, however, the judgement was challenged by the federal government before the Supreme Court of Pakistan and the operation of the LHC’s decision has been deferred.

Regarding the merits and demerits of the imposing of surcharges the regulator said that NEPRA has not charged any of the surcharges, rather it is the federal government which has the statutory power for doing the same action. NEPRA is only responsible for requesting to simply indicate the number of surcharges levied by the government in the schedule for the objective of recovery.

The regulator further informed that the federal government under the section of 31(5) of the NEPRA Act, 1997 has the authority to levy any surcharge and any surcharges are to be included as a cost in the determination of the tariff determined by NEPRA.

The regulator also said that the interveners and the affected groups should contact the federal government for readdressing their concerns over the imposition of surcharges.

As per an official, the continuation of three surcharges would not be raising the current tariff however it would deprive the users a legal tariff reduction as determined by the regulator over the last two years.

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