Security deposits, user-paid infrastructure: APTMA urges Nepra to make audit report public

ISLAMABAD: All Pakistan Textile Mills Association (Aptma) has urged National Electric Power Regulatory Authority (Nepra) to make public the audit report on security deposits, consumer-funded infrastructure and their utilization, in the interest of transparency before any revision of security deposit rates.

In letters addressed to Nepra and the Power Minister, Aptma Chairman Kamran Arshad referenced petitions filed by Distribution Companies (DISCOs) seeking a revision of security deposit rates for consumers, with a hearing scheduled for February 11, 2025.

Arshad requested that Nepra mandate a comprehensive audit of all security deposits and consumer contributions held by DISCOs, including K-Electric, before proceeding with any rate increases.

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“Without a clear assessment of existing deposits and how they have been used, imposing additional financial burdens on consumers is unjustifiable,” said Arshad.

Aptma’s concern centers on the lack of transparency in the total amount of security deposits currently held by DISCOs.

The association is calling on Nepra to require full disclosure of these amounts, alongside a detailed breakdown of how the funds have been utilized.

Additionally, any interest accrued on these deposits should be returned to the respective consumers, ensuring that they benefit from the financial gains generated by their own funds.

Another critical issue raised by Aptma is the treatment of consumer-funded infrastructure.

Consumers are responsible for financing infrastructure at all voltage levels, including connections, transformers, and distribution lines. After installation, these assets are transferred to DISCOs at no cost. Furthermore, consumers contribute to grid-sharing costs, indirectly financing parts of the national grid infrastructure.

Despite these significant contributions, there is no recognition or adjustment in the tariff structures to account for these consumer-funded assets in DISCOs’ financial statements.

Aptma insists that these assets be excluded from the Regulated Asset Base (RAB) of DISCOs, as their inclusion allows DISCOs to earn returns on infrastructure they did not invest in, ultimately inflating costs for consumers.

To ensure fairness, Aptma is calling for an independent audit to verify that DISCOs are not deriving financial benefits from consumer-funded assets. Public disclosure and transparency in these financial matters are vital, they argue.

“The Nepra must ensure that all stakeholders, especially consumers, have full visibility into these financial mechanisms,” Arshad added. “We strongly urge that a detailed audit report be made available before any decision is made on increasing security deposit rates. Without transparency, any revisions would lack credibility.”

Several other trade organizations and associations have also approached Nepra, seeking detailed audits of previous collections made in the name of security deposits.

Copyright Business Recorder, 2025