NA Committee on Power Demands Transparency Regarding Imposition of Surcharges

The National Assembly Standing Committee on Power observed that the Circular Debt Management Plan needs transparency and clarifications with regards to the imposition of the surcharge.

The Committee, met under the Chairmanship of MNA, Chaudhry Salik Hussain, deliberated on the Bill “The Regulation of Generation, Transmission and Distribution of Electric Power (Amendment) Bill, 2020.”

Salik Hussain and other Members of the Committee observed that the Circular Debt Management Plan needs transparency and clarifications regarding the imposition of the surcharge. The Secretary said that an exclusive briefing will be given on the Circular Debt Management Plan after the same is presented before the Cabinet.

The Secretaries of M/o 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 number of such surcharges would be deemed as a cost incurred by the distribution companies (DISCOs) and included in the tariff, they said.

The Ministry told 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 and that such surcharges shall be levied for the fulfillment of, to the extent decided by the Federal Government, any financial obligation of the Federal Government for electric power services.

The Committee asked the Ministry that the Public Sector Project of National importance be added and sought an explanation of financial obligations vis-à-vis 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 and projects of strategic importance. Even if a surcharge is capped at 10 percent 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). On the suggestion of the Committee, a provision was added that the aggregate amount of such surcharges shall not exceed ten percent of the aggregate revenue requirement of all the 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 and giving their input.

The CEO of Karachi Electric (KE) appeared before the Committee and assured that the concerns of Legislators will be addressed in writing.

The meeting was attended by MNA’s, Sher Akbar Khan, Saif Ur Rehman, Lal Chand, Muhammad Israr Tareen, Saira Bano, Zahid Akram Durrani, Secretaries, M/o Power Division & Finance, and senior officers of the relevant departments.

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