Impending shock for power consumers


ACCORDING to media reports, Ministry of Finance has clubbed amendments in NEPRA Act with the Finance Bill 2020-21 to get it passed before July 1, 2020 as per agreement with the International Monetary Fund (IMF) aimed at empowering the regulator to pass on cost inefficiencies of power sector to the consumers through imposition of Debt Servicing Surcharge (DSS). This, if implemented, would prove to be a serious shock to power consumers who are already protesting against high tariff, a multitude of taxes incorporated in the bill and non-withdrawal of levies imposed for a particular purpose and for a specific period but continue to-date.
It is argued that amendments in question are critical for systematic efficiency in terms of power sector tariff determination and notification, optimal revenue collection and reduction in circular debt. No one would oppose improvement in efficiency, increase in revenue collection and measures aimed at tackling the circular debt effectively. However, it is the easy approach of jacking up tariff every now and then putting not only additional burden on the consumers but also deep impact on the overall economic activities. Cost efficiencies have much to do with worn out transmission and distribution system and rampant corruption and, therefore, it is regrettable that instead of initiating measures to improve efficiency through system upgradation and modernization and focusing on accountability of the corrupt, the Government is permanently empowering the power entities to revise the tariff on a quarterly basis. The empowerment might prove to be a dis-incentive for implementation of any plan for modernization of the system. The Government is, of course, under great pressure as IMF has suspended disbursement of the next instalment pending implementation of the benchmarks that the Government had committed with the Fund while entering into a bail-out package but the measure would run contrary to the avowed commitment of the Prime Minister to provide relief to the people during 2020. The economy is in deep troubles due to impact of Covid-19 and needs stimulation measures while quarterly increases in the tariff would undermine this objective. The policy of penalizing the consumers for inefficiencies of the organizations and corruption of its officials need to be reversed.