NEPRA Concerned Over Imposing Power Surcharge on Consumers

Islamabad: The National Electric Power Regulatory Authority (NEPRA) on Thursday raised serious questions over the imposition of a power surcharge on consumers.

The regulator held a public hearing on the government’s petition to allow the imposition of a Rs3.39/unit additional surcharge and the transfer of up to Rs14.23/unit staggered FCA to power consumers.

In two separate public hearings on the motions filed by the Federal Government, NEPRA has said that the regulator is not clear whether the transfer of both burdens is within their domain or not and sought legal opinion on the matter.

Nepra Chairman Tauseef H. Farooqi chaired the proceedings, while the authority’s members were also present.KE Investment Plan worth Rs 484b submitted to Nepra

In the first hearing on the federal government motion seeking the regulator’s nod to allow the burden of an additional surcharge of Rs3.39/unit on the electricity consumers, having an impact of Rs76 billion from March to June 2023.

The NEPRA official said that already Rs0.43/unit is being charged to consumers, and now the government wants to increase it to Rs3.82/unit.

The additional surcharge of Rs3.39/unit will be recovered for the period from March to June 2023 to cover the markup charges of PHL loans not covered through already applicable FC surcharge of 0.43/kwh for FY 2022-23.

After four months, the additional surcharge of Rs3.39/unit will be reduced to Re1/unit to cover the additional markup charges of PHL loans not covered through already applicable FC surcharge @0.43/unit; the total surcharge becomes Rs. 1.43/unit for FY 2023-24.

The levying of an additional surcharge of Rs3.39/unit in electricity tariffs will enable the government to pay off Rs120b interest on the loans of the Power Holding Company.

With the application of an additional surcharge of Rs3.39/unit, the total surcharge will reach Rs3.82/unit for the four months (Mar-June).

Currently, power consumers are paying Rs0.43/unit surcharge to clear Rs44b for paying off the interest on the loans of the PHL.

Now, with the levying of a special surcharge of Rs3.39/unit, an additional Rs76bn will be collected from power consumers within the next four months, from March to June 2023.

Out of the total outstanding finance facilities of Rs800.253 billion, as of June 30, 2022, servicing of loans amounting to Rs246.384 billion is being managed by imposing Financing Cost (FC) surcharge levied @ Rs0.43/unit under dated March 22, 2018, as modified from time to time.

This FC Surcharge @ Rs0.43/unit is not sufficient to cover markup charges of total PHL loans. The markup of remaining loans is being paid from revenue collected through electricity sales, and the same constrains essential fuel and debt payments to the suppliers.

The total surcharge becomes Rs3.82/unit for the said period, and for FY 2023-24, an additional surcharge of Rs3.39/unit will be reduced to Rs1/unit to cover the additional markup charges of PHL loans not covered through already applicable FC surcharge @0.43/unit; the total surcharge becomes Rs1.43/unit for FY 2023-24.

The Authority’s nod has been sought for the incorporation of surcharges, i.e., Rs3.82/unit and Rs1.43/unit, for four months of FY-23 and FY-24, respectively.

The Chairman of NEPRA, who presided over the proceedings, asked whether NEPRA can reject