ISLAMABAD, Feb 10: The government has decided to move Supreme Court against the decisions of Peshawar and Islamabad high courts barring recovery from consumers of Rs171 billion on account of monthly fuel-based power tariff increase.
A government official told Dawn on Sunday that about Rs67bn arrears had been stuck with consumers on account of fuel-based monthly price adjustment approved by the National Electric Power Regulatory Authority (Nepra) after the IHC declared monthly fuel adjustment illegal.
Another Rs15bn approved by Nepra had been stopped by the PHC. The official said that after the IHC’s decision Rs17bn worth of petitions by distribution companies of Wapda could not be notified by the regulator.
He said the government had decided to club the two decisions and file an appeal before the Supreme Court so that tariffs approved by the regulator could be recovered from consumers.
Under the monthly fuel adjustment formula, the variation in fuel prices is recovered from consumers as a direct pass-through item approved by Nepra. The fuel adjustment mechanism was put in place about eight years ago and remained in practice until early this year when aggrieved consumers challenged it in courts. While the PHC issued a stay order, the IHC declared variation in fuel prices illegal.
Officials said the government would also challenge a decision of Nepra for disallowing transmission and distribution losses. Under this head, the government has estimated that it has lost Rs72bn over the past two years.
Officials said that Wapda’s distribution companies had been pleading before the regulator to take into consideration investment plans being taken in hand with assistance from international lenders to reduce transmission losses that would take five to seven years to complete and then disallow higher transmission losses to be passed on to consumers. They contended that given the poor shape of the transmission system, certain percentage of losses were unavoidable which should be charged to consumers until fresh investment plans were completed. To achieve this, the annual loss reduction should be linked with gradual reduction in tariff.
The Nepra has, however, taken the stance that it was a failure of the power companies to augment their system and they should bear the cost of inefficiency instead of passing it on to consumers.
Officials said the power ministry was preparing a case for filing an appeal before the Supreme Court because it felt the apex court’s view on recovery of revenues had been more favourable to it. The court has in many cases upheld powers of the government to impose taxes and recover revenues in the interest of running the country’s affairs.
Another measure under the recovery plan involves increasing electricity rates for big consumers on the principle of “ability to pay” to encourage energy conservation to reduce large-scale subsidies being enjoyed by all consumer groups resulting in about Rs3.60 per unit gap between the electricity cost approved by the regulator and the subsidised tariff notified by the federal government because of social or political compulsions.
Currently, the government is paying about Rs150bn as tariff differential subsidy per year as a result of an average applicable tariff of Rs7.80 per unit against a Nepra approved tariff of Rs11.40 per unit.
