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Thursday, February 15, 2024

Govt gets Nepra bill cleared to revive IMF program

A bill empowering the govt to impose surcharges on electricity consumers to meet another ‘prior action’ for revival of the International Monetary Fund (IMF) program was cleared by a parliament committee on Thursday.

After facing tough resistance from the opposition, the government was finally able to get the Nepra bill cleared which would allow it to revive the International Monetary Fund (IMF) program. Under the bill which would now go to the National Assembly for approval, the government has been given the power to impose around Rs1.5 per unit additional surcharge to cover the cost of inefficiencies and losses.

“The Regulation of Generation, Transmission and Distribution of Electric Power (Amendment) Bill, 2020” — also known as Nepra Act is one of the pre-conditions for revival of the IMF programme that has been put on hold since February last month. This bill had been pending before the National Assembly’s Standing Committee on Power since months before it got approved on Thursday.

Read More: Is Pakistan producing surplus electricity?

The committee meeting was chaired by Chaudhry Salik Hussain of the Pakistan Muslim League-Quaid. Sher Akbar, Amir Dogar, Saif-ur-Rehman, Lal Chand Engineer and Sabir Hussain Qaim Khani were the five members who voted in favor of the bill. The bill was opposed by Shazia Marri, Saira Bano, Ghulam Mustafa Shah and Riaz Hussain Pirzada.

The opposition members were concerned about the consequences of the surcharge and believed it to be a burden for the masses who are already grappling with high electricity prices.

Chairman Salik Hussain stressed that the ‘surcharges’ should only be imposed to fund developmental projects of national importance. He quoted the example of Diamer-Bhasha Dam and other projects of strategic nature in AJK and Gilgit-Baltistan which are being developed to secure water rights under the Indus Water Treaty.

“Even if surcharge is capped at 10pc of the base tariff, power surcharges should not be allowed to pay for future circular debt which should be budgeted elsewhere by Ministry of Finance and paid for through tax revenues”, he said.

Nepra to impose surcharge on power consumers for IMF progam

Power Secretary Ali Raza Bhutta said that though NEPRA now has the power to impose surcharge on power consumers, it is not certain whether the surcharges would actually be imposed in the near future. The surcharge would need to be approved by the prime minister and the cabinet first and would then be utilized against capacity purchase payments. To meet the required revenue, maximum surcharges will be levied up to 10pc of electricity cost

Shazia Marri opposed the bill saying that the people shouldn’t have to pay for the inefficiencies of the power sector that the current government has failed to address.

Read More: NEPRA approves an increase in electricity prices

Syed Ghulam Mustafa Shah also asked why there was a need for more surcharges when electricity was already so expensive.

Energy Minister Omar Ayub Khan confirmed that the surcharges would only be levied if approved by the federal cabinet. He also said that the revenue from power surcharges would be spent on power projects. He blamed the previous governments for expensive electricity generation and said that the country would have to shift from oil to cheap sources for power generation.

He said once the parliament approves the bill, the government would be able to invest in the infrastructure and other obligations, eventually benefiting consumers as being relieved of high price of electricity with the betterment in the infrastructure and lowering of circular debt. The electricity losses would be reduced by 2.2pc over the next two years and recoveries would be improved by 5.6pc to at least 96pc, he added.

Finance Secretary Kamran Ali Afzal confirmed that there would be no surcharge on small power consumers. He said circular debt had reached Rs2.3 trillion and “if we do not resolve these issues today, the economy will sink tomorrow”, he said.