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Federal government is accused misguiding lenders on the true purpose of amendments to the Nepra Act which is aimed at making the regulator as ineffective as Oil and Gas Regulatory Authority (OGRA). This is the general perception of the regulatory bodies subsequent to the issuance of the June 6, 2017 notification by the Cabinet Division, which has been suspended by the Lahore High Court (LHC).

On June 6, 2017, Cabinet Division issued an Office Memorandum (OM) placing the regulatory bodies once again under the administrative control of their respective line Ministries. Meanwhile, Cabinet Committee for disposal of Legislative Cases (CCLC) headed by Law Minister Zahid Hamid has approved amendment in Rules of Business of Regulatory bodies which were subsequently ratified by the federal cabinet recently.

The notification stated "The federal government has been pleased to order that henceforth the Water and Power, Information Technology and Telecom Division, Petroleum and Natural Resources Division and Finance Division will deal with the government functions of regulatory authorities that include NEPRA PTA, FAB, OGRA and PPRA will respectively." The notification also mentions that necessary amendment in the rules of business, 1973 will be made accordingly.

An official well versed with the current tension between the Ministry of Water and Power and Nepra told Business Recorder that while the donors have pressured the government to impose surcharge on electricity bills to deal with a resurgence of circular debt, they have opposed the government's move to curb the independence of Nepra.

The Ministry of Water and Power had invited donors to the Ministry and convinced them that the government has no intention of clipping the wings of the regulator, and that the objective is to bring in reforms in the regulator through amendments.

"Donors had made a commitment of $300 million with the government for reforms but got an assurance that the regulator's independence will not be compromised," he continued. Presently, electricity consumers are paying the surcharge of Rs 1.43 per unit with no legal justification to contain the circular debt, which currently stands at over Rs 451 billion. Donors urged the government to make the imposition of surcharge a part of the amended Nepra Act draft which will be passed by Parliament after Eidul Fitr. "And now there will be no fear that surcharge will be erased in case it is challenged in a court of law," says the official while quoting the purported written argument of donors.

"The government has prepared at least four drafts which were submitted to different forums. However, Nepra whose independence will be the main causality, has not been taken in the loop," he added. The generation licence will be free for all and anybody would be able to establish power plants without any environmental study which is critical to any project.

The 31 A insertion in the final draft of the NEPRA act of 1997 which deals with the Surcharges states: "The government may, in addition to the tariff determined by the Authority, impose a surcharge on such consumer categories as may be notified in the official gazette. Apart from it, surcharge can be imposed after getting determined under National Electricity Plan for other purposes that include for raising funds for future development plans in power sector, environmental protection, energy efficiency, demand management, managing climate and promoting the security of energy supply. Surcharges will also be imposed to give effect to any tariff rationalization or subsidy management guidelines as may be issued by the federal government from time to time."

As far as the government's final draft laid down in the parliament is concerned, the official said, as soon as the parliament approves it, the first casualty will be the authority of the regulators that consists of four members and one chairman (the age limit for the said posts has been reduced by 10 years).

After parliament approves the amended NEPRA Act, the regulator will have no role in determining the tariffs as it will be bound to comply with the National Electricity Policy and Plan that will in future determine the tariffs. Once the amended Nepra Act gets approved, National Electricity Policy and Plan will be undertaken by the government that will regulate the regulator.

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