ISLAMABAD - The National Electric Power Regulatory Authority (NEPRA) has allowed the federal government to impose an additional surcharge of Rs3.39 per unit and Rs1 per unit from March to June 2023 and Jul 2023 to June 2024, respectively, having a cumulative impact of Rs149 billion on power consumers. With the application of additional Rs3.39 per unit, total surcharge becomes Rs3.82 per unit for the four months of 2022-23, having an impact of Rs75 billion; and for FY 2023- 24, the additional surcharge of Rs3.39 per unit will be reduced to Rs1 per unit to cover the additional markup charges of PHL loans not covered through already applicable FC surcharge of Rs0.43 per unit— in this way, the total surcharge becomes Rs1.43 per unit for FY 2023-24, having an impact of Rs74 billion, said the NEPRA decision issued in the matter of motion of the federal government with respect to recommendation of consumer-end tariff for XWDISCOs and K-Electric.
Despite opposition from the electricity consumers, the NEPRA has decided to allow application of additional surcharge through instant decision. For K-Electric consumers– since the existing surcharge of Rs0.43 per unit is not applicable, therefore, total surcharge of Rs3.82 per unit may be charged from the consumers of KE. It has been submitted that K-Electric applicable uniform variable charge is required to be modified to recover the revenue requirements of K-Electric determined by the NEPRA, keeping in view the proposed targeted subsidy and cross subsidies, which will also be consistent with the surcharge approved for XWDISCOs.
In view thereof, the authority has decided to allow application of the surcharge to be recovered from different categories of consumers of K-Electric, for the period from March to June 2023 and for the FY 2023-24, to cover the markup charges of PHL loans. The Power Division said that the additional surcharge is intended to cover the markup charges of PHL loans not covered through already applicable FC surcharge of Rs0.43 per unit. It was also explained that with these additional surcharge, an additional amount of Rs75 billion will be billed for the period from March to June 2023, against which around Rs68 billion will be recovered at an expected recovery of 90 percent. Similarly, for the FY 2023-24, with the additional surcharge of Rs1 per unit, an amount of around Rs74 billion will be recovered assuming recovery of 90 percent.
Regarding payment of principal amount of PHL loans, the ministry explained that the federal government has already paid an amount of Rs202 billion of PHL till FY 2021-22, through its fiscal space, thus reducing the balance from over Rs1 trillion to Rs800 billion as of June 30, 2022. Similarly, for the FY 2022- 23, an additional amount of Rs35 billion will be paid and this will further reduce the overall financing cost. The markup of remaining loans is being paid from revenue being collected through electricity sales and the same constrains the essential fuel and debt payments to the suppliers.
Concerning the issue, Economic Coordination Committee (ECC) of the Cabinet, vide its decision in Case No ECC-44/06/2023 dated 10th February 2023, duly ratified by the Cabinet vide Case No 98/Rule19/2023 dated 14th February 2023, approved the additional surcharge of Rs3.39 per unit to be recovered for period from March to June 2023 to cover the markup charges of PHL loans not covered through already applicable FC surcharge of Rs0.43 per unit for the FY 2022-23, total surcharge becomes Rs3.82 per unit for the said period and for FY 2023-24, additional surcharge of Rs3.39 per unit be reduced to Rs1 per unit to cover the additional markup charges of PHL loans, not covered through already applicable FC surcharge of Rs0.43/ kWh, the total surcharge becomes Rs1.43 per unit for the FY 2023-24. It was also decided that the same be submitted to the authority for incorporation of the above-mentioned surcharges i.e. Rs3.82/kWh and Rs1.43/kWh for four months of FY-23 and FY-24 respectively, in the latest Schedule of Tariffs of XWDISCOs.
The surcharge so collected is within ten percent of the aggregate revenue requirement of all electric power suppliers engaged in supply of electric power to end consumers, as determined by the authority. The consumers present during the hearing, opposed the additional surcharge by stating that these are inefficiencies of DISCOs which are being proposed to be recovered through application of additional surcharges, and would be paid by the paying consumers. During the hearing, the authority also directed the MoE to provide opinion from the Ministry of Law and Justice in the matter. The MoE forwarded to the Ministry of Law and Justice a legal opinion on the matter.
The opinion states, “It is dear from Section 31 (8) of the NEPRA Act, 1997 that any surcharge will be charged and notified by the federal government in the official gazette. The later part of Section 31 (8) provides notification of such surcharge, the same will be included in the tariff as determined by the NEPRA under the Act ibid to be notified by the federal government. In the light of the foregoing, the NEPRA may consider motion of the federal govt, accordingly.” The authority understands that the federal government is empowered under Section 31 (8) of the NEPRA Act to impose surcharges, said the decision.
The authority also observed the surcharge so collected is within ten percent of the aggregate revenue requirement of all electric power suppliers engaged in supply of electric power to end consumers, as determined by the authority and are being imposed to cover the markup charges of PHL loans, not covered through already applicable FC surcharge during the FY 2022-23 and the FY 2023-24. Considering the fact that motion has been filed under Section 31(8) of the NEPRA Act, which empowers the federal government for imposition of surcharge, opinion from the Ministry of Law and Justice and the fact that surcharge is being levied for fulfillment of the financial obligation of the federal government with respect to coverage of markup charges of PHL loans, the authority has decided to allow the motion filed by the federal government. The surcharge shall be applicable w.e.f 01.03.2023 and shall be shown as a separate head in the consumers’ bills, said the decision.
