Regulatory independence

Independent regulation is not a technical formality; it is the foundation of a credible and functional power sector. This is why the National Electric Power Regulatory Authority was created as an autonomous regulator, operating at arm’s length from the executive. Its purpose was to ensure that tariff determination and regulatory decisions are based on law, technical analysis, and transparency, rather than short-term administrative or fiscal pressures.

The recent proposed amendments to the power sector laws, which shift key approval and notification powers from the federal government to the Power Division, risk undermining this institutional design.

While framed as procedural adjustments, their practical effect is a concentration of regulatory influence within the bureaucracy. This represents a move away from rule-based regulation toward administrative discretion, which is neither healthy nor sustainable for a sector as complex and capital intensive as power.

Historically, tariff notification under Section 31 involved federal government oversight, which implied collective responsibility and an additional layer of accountability. Replacing this framework with authority vested in the “division concerned” raises legitimate questions about concentration of power and transparency. Regulatory decisions require insulation from departmental priorities, particularly where those priorities are shaped by subsidy management and short-term fiscal constraints.

It is important to state clearly that this concern is not political in nature. It’s all about the core function of Nepra, consumer and sector protection. The current political leadership has made sincere efforts to rationalize costs in the power sector, and whatever tariff relief has been achieved in recent months has largely been driven by ministerial intent. Those efforts deserve acknowledgment.

However, despite these initiatives, government departments have still been unable to deliver electricity to industry at competitive levels. The continued inability to move toward tariffs around 9 cents per unit remains a serious concern for industrial sustainability and export competitiveness.

This gap between intent and outcome highlights a deeper institutional issue. Power Division departments appear increasingly focused on managing subsidies and fiscal exposure, often through decisions that shift costs rather than eliminate inefficiencies which often comes as an additional and social cost on industrial tariff. While fiscal pressures are real, they cannot justify weakening the regulator.

An independent regulator exists precisely to balance cost recovery, efficiency, consumer protection, and long- term sector health, even when such decisions are administratively uncomfortable.

If there is concern that regulatory decisions require closer scrutiny or improved consistency, the solution does not lie in curtailing regulatory independence.

The appropriate response is to strengthen oversight, not control. A neutral and professional regulatory oversight board can be established to review regulatory performance, track outcomes, and ensure accountability without interfering in decision making authority.

Such a mechanism would restore checks and balances while preserving institutional credibility. It would allow policymakers to evaluate whether regulatory decisions are delivering intended outcomes, while maintaining a clear separation between policy formulation, regulation, and execution. This separation is essential for investor confidence, consumer trust, and long-term stability of the power sector.

The recent proposed amendments risk weakening what remains of regulatory independence at a time when the sector requires stronger institutions, not centralized discretion. Sustainable reform demands respect for institutional roles, transparent oversight, and clear boundaries.

Undermining the regulator may offer short-term administrative comfort, but it carries long-term costs that the power sector and the broader economy can ill afford.

Copyright Business Recorder, 2026