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Home / Business / IMF wants end to govt’s role in power tariff determination

IMF wants end to govt’s role in power tariff determination

ISLAMABAD (Web Desk) Appreciating the role of China-Pakistan Economic Corridor (CPEC) in addressing energy shortages, the International Monetary Fund (IMF) has asked the government to give up its powers on notification of electricity rates, determined by the National Electric Power Regulatory Authority (Nepra), as a key tool to end repeated emergence of circular debt.

Informed sources told Dawn that a major chunk of the circular debt has been coming up because of the time consumed in tariff determination by the regulator on petitions filed by power companies and then its back and forth exchange with the government for notification.

These sources said the visiting delegation wants authorities to make further amendments to the Nepra Act to ensure automatic notification of quarterly, annual and multi-years tariffs, determined by the regulator on the pattern of monthly fuel price adjustment which is notified directly by Nepra.

Says automatic notification will check re-emergence of circular debt

The base tariff, on the other hand, sometimes consumes more than a year and in recent years has lingered on for over two years due to litigations by power distribution companies with the backing of the Power Division.

“The amendments are already being discussed in this regard to ensure that the regulator receives tariff petitions on templates and determines rates under a pre-determined formula and performance standards in a time-bound manner and then stand automatically notified within the shortest possible manner,” an official said.

Informed sources said the Fund delegation has already held three sessions with the Power Division authorities besides discussing these challenges with the finance ministry. On Thursday, the IMF mission would have a rare direct interaction with the chairman, members and top officials of the power regulator at Nepra Headquarters to have an independent view of the regulator on power sector issues and challenges.

On Wednesday, the IMF mission, led by chief Herald Finger, visited the Planning Commission and noted that CPEC has played a crucial role in substantially increasing power production in a short period of time that would aid in achieving sustained economic growth.

The Planning Commission team was led by Federal Minister for Planning, Development & Reform Makhdum Khusro Bakhtyar and comprised Secretary Planning Zafar Hasan, and CPEC Project Director Hassan Daud Butt and senior officials. The mission is expected to hold another in-depth session with the commission.

The minister told the mission that economic and social objectives of the government were to protect and provide relief to the marginalised segments of society by prioritising focus on human resource development, social security and job creation.

Keeping in view the economic situation, the government had already rationalised Public Sector Development Programme (PSDP) by almost 35 per cent with its throw-forward liability brought down to a manageable level. He said the PTI government inherited a fragile economy and it has taken a number of corrective measures to revive and put it on the path to sustained growth.

The IMF delegation was told that emphasis was being laid on attracting investments in areas where it can lead to direct impact on exports or reducing the import bill and new ways of financing were also being explored. He said the projects that are run on imported fuel will not be encouraged.

Also, the government is now paying attention on improving electricity transmission system in the wake of increased power generation capacity. The minister underlined that robust economic planning was being made to enhance tax-to-GDP ratio by increasing the domestic revenue.

Talking about CPEC, the minister said that the mega project had now entered into its second phase with focus on industrialisation, socio-economic initiatives and joint ventures, especially in agriculture sector to increase productivity as well as improve irrigation network system. He noted that CPEC in its first phase had helped a great deal in boosting power generation.

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