ISLAMABAD: National Assembly Standing Committee on Power again deferred the Bill to empower the Federal Government to impose surcharge up to 10 per cent per unit on all categories of electricity consumers, to pay interest on loans raised from banks to retire circular debt despite the fact that Secretary Finance, Kamran Ali Afzal and Secretary Power, Ali Raza Bhutta were piqued by the slackness of the committee.
Presided over by Chaudhry Salik Hussain, the committee pointed out that as there are some issues which still require clarification and some members of the committee are not present in the meeting the bill has to be deferred till the next meeting.
The government has pledged to submit the committee’s approval to the International Monetary Fund (IMF) which accounted for the visible irritation of the two Secretaries when the Chairman stated that the Bill will be passed next week.
The Secretary Finance argued that any delay in approval of the Bill will further increase financial burden on consumers as it has to be collected from them.
The treasury member, Sher Akbar Khan, threatened that he would write a dissenting note if the proposed bill was passed that day (Thursday). The Neelum Jhelum surcharge of Paisa 10 per unit was recently done away with the government seeking to replace it with a proposed surcharge of 10 per cent per unit.
The proposed amendments to the Regulation of Generation, Transmission and Distribution of Electric Act, 1997 in section 31 (8) stipulate: “Notwithstanding anything contained in this Act and in addition to the tariff, rates and charges notified under sub-sections (7) and this sub-section, each electric power supplier shall collect such surcharges from any or all categories of consumers, as the Federal Government may charge and notify in the official Gazette from time to time, in respect of each unit of electric power sold to any or all categories of consumers and deposit the amount so collected in such manner as may be provided by the Federal Government. The amount of such surcharges shall be deemed as a cost incurred by the electric power supplier and included in the tariff notified under sub-section. Provided that such surcharges shall be levied for the following purposes, namely:- (i) funding, to the extent decided by the Federal Government, any public sector project of national importance and ;(ii) fulfillment of, to the extent decided by the Federal Government, any financial obligation of the Federal Government with respect to electric power services. Provided further that the aggregate amount of such surcharges shall not exceed ten percent 10% of the aggregate revenue requirement of all electric power suppliers owned or controlled by the Federal Government as determined by the Authority.”
The Secretary Power informed the committee that the Government wants the power to impose surcharge on consumers which will be used for power sector projects of national importance.
Chairman Standing Committee pointed out that the committee has to apprise the people as to which project would be funded by the surcharge.
Secretary Power, Ali Raza informed the committee that the amount of surcharge will be used for power generation, transmission and distribution.
Chairman Standing Committee said that people are paying a very heavy price for the establishment of expensive thermal power plants, adding that circular debt is increasing due to expensive power projects.
Israr Tareen, an MNA from Balochistan, stated that the people of his province are already struggling to make ends meet and any surcharge would make their life more harder. The Secretary Power responded by saying that electric tubewells in Balochistan will be shifted to solar power in the next two years.
The Secretary Power informed the committee that the Power Division is preparing ‘Circular Debt Management Plan’ in consultation with Finance Ministry, according to which Rs 60 billion on tubewells in Balochistan will be done away with by shifting tubewells to solar system, and Rs 212 billion will be “recovered” from KE.
The Secretary Power further stated that efforts are being made that the estimated annual subsidy of Rs 430 billion be made part of the budget.
According to official statement, Chairman Standing Salik Hussain and other Members of the Committee observed that the Circular Debt Management Plan needs transparency and clarifications with regards to the imposition of surcharge. The Secretary said that an exclusive briefing will be given on the plan, after it is presented before the Cabinet.
The Secretaries of ministries of Power and Finance told the Committee that the Bill would empower the Federal Government, that in addition to the notified tariff, rates and charges determined by the regulator, to impose such surcharges on any or all categories of consumers as it may notify from time to time on each unit of electricity. The amount of such surcharges would be deemed as a cost incurred by the Distribution Companies (Discos) and included in the tariff, they said.
The Ministry said that such surcharges would be levied for funding any public-sector project to the extent decided by the Federal Government or fulfillment of any financial obligations of the Federal Government on account of electric power services. The surcharges shall be levied for the fulfillment of, to the extent decided by the Federal Government, any financial obligation of the Federal Government with respect to electric power services.
The Committee asked the Ministry that Public Sector Project of National importance be added and sought explanation of financial obligations vis-à-vis the Circular Debt Management Plan. The Chairman opined that “surcharges” should be imposed only to finance specific developmental projects of national importance, for example, the on-going Diamer Basha Dam project in AJK/GB in future (to secure our water rights under the Indus Water Treaty with India), etc., and projects of strategic importance. Even if surcharge is capped at 10% 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). On the suggestion of the Committee a proviso was added that states that aggregate amount of such surcharges shall not exceed ten percent (10%) of the aggregate revenue requirement of all electric power suppliers owned or controlled by the Federal Government as determined by the Authority. The bill was deferred for the next scheduled meeting with the direction that the bill with proposed amendments be sent to the Committee for study.
The CEO of Karachi Electric (KE) appeared before the Committee and assured that concerns of Legislators will be addressed in written form. The meeting was attended by MNAs’ Sher Akbar Khan, Saif Ur Rehman, Lal Chand, Muhammad Israr Tareen, Saira Bano, Zahid Akram Durrani, Secretaries, ministries of Power and Finance and senior officers of the relevant departments.
Copyright Business Recorder, 2021