5pc indexation on net hydel profit: Nepra under fire for breaching CCI domain

ISLAMABAD: In the latest development, the Punjab government also followed the federal government in questioning the approval of five percent indexation in Net Hydel Profit by the National Electric Power Regulatory Authority (Nepra), transgressing the domain of Council Of Common Interests (CCI).

The Punjab Energy Department has also challenged the decision of Nepra arguing that it is in violation of the CCI decisions taken in 2016 and 2017. In its review petition, the Punjab government asked Nepra to suspend the impugned determination, refrain from noting it in the official gazette, hold its operations in the larger interest of the people of Pakistan and maintain its earlier decision dated August 23. 2021, till an unequivocal decision by the CCI on the subject and any other relief, deemed necessary for the equitable and legal disposal of the review motion may be granted.

With respect to the modification petition filed by the government of Khyber Pakhtunkhwa in Nepra Decision dated August 23, 2021, regarding the WAPDA Hydroelectric Tariff Petition for FY 2020-21, Nepra on September 9, 2022, approved a 5% annual indexation of Net Hydel Profit (NHP) over the rate of Rs. 1.1 0/Kwh to the Government of Khyber Pakhtunkhwa and Government of Punjab with effect from FY 2015-16 and FY 2016-17 respectively subject to its adjustment, if any, in light of the CCI decision. And the government of Khyber Pakhtunkhwa will move its summary before CCI in order to secure explicit approval, in the matter, and till receipt of any CCI decision in the matter, the 5% annual indexation of NHP shall be continued. The decision taken by the power regulatory signed by KPK and Sindh Member in the Authority and with conditional signature by Chairman has not only irked the federal government but also the Punjab government.

Earlier the Federal government has shown its grave concern over the controversial decision taken by Nepra. The power division in its letter said that the power regulator has committed a flagrant breach of the CCI domain. Nepra chairman in its dissenting note over the approval of 5 percent indexation of NHP wrote that the government of KPK is to bring the summary in the next CCI meeting for their explicit approval as agreed in the regulatory meeting and Nepra reserves the right to see CCI approval on its own. The Power Division earlier in its letter to Nepra that CCI has not approved a 5 percent annual indexation in NHP, however, CCI has approved NHP at the rate of Rs1.10 per unit.

When contacted, a Nepra spokesman said that the Authority has approved the 5 percent indexation of NHP offering no more comments when asked if the Authority has flouted the domain of the CCI that has never allowed 5 percent indexation of NHP. The spokesman has admitted that the federal government has written a letter to the regulator expressing its concerns. He also admitted that the Punjab govt also challenged the decision of Nepra over the approval of a 5 percent indexation on NHP.

However, despite having recognized the CCI’s constitutional role in the matter, and the fact that the CCI itself had previously decided in its 2016 decision – as amended in 2017 – that “the same rate may be continued… till the finalization of revised rate” Nepra proceeded to grant indexation on NHP on an interim basis for a six-month period from the date of the notification of its determination which is the breach of the domain of the CCI. Now the Punjab government has also challenged the decision of the power regulator in its review petition arguing that the government of Punjab in its intervener request dated 22.08.2022 pointed out to the Nepra that the GoKP has misinterpreted the decision of the CCI recorded in paragraph 35 of minutes.