ISLAMABAD: The Senate Special Committee on Circular Debt was informed Monday that delay in filing of tariff petitions by the power distribution companies (Discos) and their determination by the regulatory authority was one of the main reasons of piling of circular debt .
The committee, which met here under the chairmanship of Senator Shibli Faraz was informed by National Electric Power Regulatory Authority (Nepra) Chairman Tariq Sadozai that Discos had failed to file their tariff petition with Nepra.
He informed the committee that despite reminders during the year 2015-16, the petitions which should have been filed in January 2015 were received as last as February 2016, which was causing delay in determination of electricity tariffs by the regulator.
In addition to delay in filing of petitions, he said the situation further aggravates when the Discos approach courts for the resolution of tariff issues, causing further delays.
The committee was informed that for year 2018-19, just a few tariff petitions were received by the authority till now.
It takes Nepra four to eight months to determine tariff as it had to follow a proper process by giving an advertisement followed by public hearing and then the tariffs are fixed.
On the occasion, some of the Discos suggested the Nepra to reduce the determination time from 6-8 months to 2-3 months to speed up the price determination process.
Meanwhile, the chairman on the occasion clarified that the committee has been constituted to come out with the permanent resolution to the circular debt issue. He said that the committee was consulting all the stakeholders to reach to detect actual problem of piling up of circular debt .
He also asked the Discos to submit a report to the committee and inform it about the problems they have been facing in regulating the power sector.
The committee was further informed that as per policy, Nepra allows 13percent technical losses, however average losses by the Discos have been recorded at about 18 percent, which inflicts loss of Rs 80 billion per annum.
As per the Nepra, after allowing 13 percent technical losses, the companies should make 100 percent recovery of the remaining 87 percent electricity, which they failed and were recovering around 92 percent.
On the occasion, the member of the committee expressed the view if thefts are controlled, it would help control circular debt .
Meanwhile, the committee also discussed the taxes imposed by the Federal Board of Revenue on electricity.
The committee was informed that the FBR was imposing tax on billing instead of on recovery amount which has been creating problems.
The committee also took notice of refund issues which the Discos claimed the board had failed to process since 2007.
Meanwhile Secretary Water and Power informed the committee that ministry in consultation with FBR had prepared a summary which has been sent to ECC for approval to streamline tax on electricity.
The committee was informed the government provided subsidy of Rs85 billion last year on electricity while it approved subsidy of Rs150 billion for the current year.
(This news/article originally appeared in The Nation on August 7th, 2018)