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ISLAMABAD: National Assembly Standing Committee on Power on Thursday empowered the Federal Government to increase electricity tariff through imposition of surcharge up to 10 percent of aggregate revenue requirement of all electric suppliers, with a one-vote majority.

Presided over by Chaudhry Salik Hussain three members of the committee from PPP and PML (N) and one member from GDA opposed amendments in “the regulation of Generation, Transmission and Distribution of Electric Power (Amendment) Bill, 2020,” whereas five treasury members i.e. four members from PTI and one member from MQM(P) supported amendments. MQM (P) member, Engineer Shabir Hussain appeared a bit confused at the time of voting but when Amir Dogar asked him to “favour” the Bill, he did it with the justification that any member can propose amendment in the House. The GDA Member, Saira Bano, who left the meeting with a bad cough returned and voted against the Bill despite the fact that Amir Dogar also requested her to favour the Bill.

Chairman Standing Committee, who initially raised some “ ifs and buts” on the Bill later on received a chit from PTI Chief Whip in National Assembly, Amir Dogar, which said “isko manzur karvain” i.e., get it passed. At this, Chairman Standing Committee replied in writing “do you have the numbers?” Amir Dogar replied “yes”.

Minister for Power, Omar Ayub informed the committee that presently revenue requirement of all electric power suppliers is Rs 1.4 trillion, which implies that the amount to be collected through surcharge will be Rs 140 billion. However, he did not focus on the impact of up to 10 per cent surcharge on the consumers as the revenue requirement will increase in years to come. He claimed that increase in bills is due to capacity charges, which is also a key reason for the increase in circular debt. Capacity charges will reach Rs 1.455 trillion by 2023.

Secretary Power, Ali Raza Bhutta who was seen jubilant, said that “10 percent of Rs 140 billion is Rs 1.40 per unit.”

“Don’t make a fool of us, clearly state that this has been demanded by the IMF. Why don’t you just say that the Bill has to be passed as a condition of the Fund,” said Saira Bano.

Most of the members argued that they should be informed of the measures being taken to reduce losses, improve recovery and discourage theft. One member said that she would prefer to give a bribe to Discos’ staff to get uninterrupted supply the whole year as she has to keep the air conditioners on for her children. Another view was that those who are involved in theft, will not pay their bills, which implies those who pay will be overburdened.

Though the Bill is part of the agreement with the International Monetary Fund (IMF), Secretary Finance, visibly jubilant after approval of the Bill, argued that the Fund does not propose anything, it is the government that submits a reform plan, adding that the government has to sort out circular debt of Rs 2.3 trillion.

Shazia Marri and Saira Bano stated that the amendments have been brought as per an agreement with the Fund.

Shazia Marri snubbed Secretary Finance for trying to address her during the meeting. She asked him to address the chair not her, after which Secretary Finance turned his face towards Chairman of the Standing Committee.

The draft amendment in section 31, Act XL of 1997 after sub-section (7) notes “the following sub-section shall be inserted, namely: 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 prescribed. 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 (7): Provided that such surcharges shall be levied for the following purposes, namely: -

(i) funding of any public sector project of public importance (to the extent decided by the Federal Government); and (ii) fulfilment of any financial obligation of the Federal Government with respect to electric power services (to the extent decided by the Federal Government).”

It was explained that for the purposes of this proviso, the term "financial obligation" includes obligations of the Federal Government to make payments in respect of purchase of electric power as well as obligations related to electric power services secured through issuance of sovereign guarantee: provided further that the aggregate further amount of such surcharges shall not exceed ten per cent of the aggregate revenue requirements of all electric power suppliers, engaged in supply of electric power to end consumers, as determined by the Authority.

Secretary Power, Ali Raza Bhutta briefed the Committee that the Bill empowers the Federal Government to impose surcharge but it does not mean it will be imposed. He further stated that the government has to reduce losses by 2 per cent in the next two years, whereas 5.6 per cent improvement in recovery to take it to 96 per cent has been envisaged.

He further stated that supply to KE will be increased to 1400MW in the next two years, of which 450MW will be added this year. Presently, 800MW is being provided from the national grid.

A verbal scuffle was witnessed between Minister for Power Omar Ayub and Shazia Marri on the incidence of theft in interior Sindh. The minister was of the view that Sindh Police does not cooperate with Discos for action against those engaged in electricity theft.

According to an official statement, members from the opposition were sceptical on the definition of surcharge and said this will burden the masses and may not be cleared. Chaudhry Salik Hussain added that “surcharges” should be imposed only to finance specific developmental projects of national importance, for example, the on-going Diamer-Bhasha Dam project in AJK/GB in future (to secure our water rights under the Indus Water Treaty with India), etc., 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 M/o Finance and paid for through tax revenues).

Minister for Power Omer Ayub Khan said that this act would enable them 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 by passing of this Act. After a detailed discussion the Bill was placed for voting. "The Regulation of Generation, Transmission and Distribution of Electric Power (Amendment) Bill, 2020” was cleared with an account of 5 votes from the Treasury and 4 votes from the Opposition, for its further passage from the National Assembly.

The Committee was briefed by the Chief Executive Officer (IESCO) on the issuance of new connections in the region of IESCO, and it was told that IESCO is giving new connections to the areas developed by CDA, in villages/native areas/old abadies, in private housing societies having valid NOC/LOP and in rural areas of Islamabad as declared in consumer services manual. There are certain areas which are restricted by the Court orders and CDA should be called to explain the reasons for not allowing IESCO for the new connections. The Committee decided to call CDA and ICT administration in the next scheduled meeting for resolving the issue.

Besides others the meeting was attended by MNA’s Sher Akbar Khan, Malik Muhammad Amir Dogar, Abdul Ghafar Watoo, Saif Ur Rehman, Lal Chand, Engr. Sabir Hussain Kaim Khani, Saira Bano, Mian Riaz Hussain Pirzada, Syed Ghulam Mustafa Shah and Shazia Marri.

Copyright Business Recorder, 2021

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