Exclusive report by Energy Update
The outgoing federal government has moved an ordinance in haste related to amendments in the NEPRA Act during the times when the president of the Pakistan is on the holy journey for the performance of Hajj and in his absence making efforts to get ordinance passed through acting president. In general the proposed amendments, if approved and enacted will results into the regulatory capture as it takes away independence of regulator and creates inefficient environment for power sector and compromise the transparent and independent functioning of the NEPRA authority and more critical is this action may trigger federal and provincial controversies due to violation of constitutional provisions and encroachment of the policy domain of councils of common interest (CCI) for attempting the regulatory capture. It’s also noted that these amendments impose decisions on regulator through federal government approved guidelines and takeover the exclusive policies and plans interpretations role to effect and strengthen its past and future unilateral actions alike impositions of the surcharges on consumers to recover cost arising out of bad governance and institutional inefficiencies and development of the projects under framework guidelines instead the CCI approved policies this results into policy and regulatory uncertainty creating frustrating environment of investments and economy. The current amendments being inconsistent with the provisions of constitution are detrimental to the future efficient investments, competitive market development, consumer interests and sustainability of the power sector, whose distressed assets of critical segments of distribution and supply business are already on agenda of provincialization/privatisation for divesture. The power sector has become unsustainable with no means to off-load the trillions of circular debt and demands immediate policy and structural reforms instead moving in much needed reforms directions, a short lived and impulsive attempts are made through such amendments that worsen the situation and spark widespread criticism and raising questions about its potential impact on impartial decision making of regulatory authority.
The proposed amendments, if approved, would introduce significant changes to the NEPRA Act and intricate matter related to the powers of the chairman as well as changes the eligibility criteria for meritorious appointments of the authority as these amendments also eliminate the specialised functions of the authority members as those were carefully introduced in past through the amended NEPRA Act 2018 and purpose of specialised members appointment was thoughtful decision making to have hands-on leadership role and head the individual functions for the effective and efficient decision making of the authority. The most controversial and contentious change proposed is the revision of eligibility criteria for the position of chairman, the amendments allow both the serving and retired civil servants to be appointed as chairman from administration group of grade 22 or equivalent made eligible for the post, it appears to be deliberate attempt to facilitate and accommodate any favourite candidate’s appointments in August, 2023 as incumbent chairman employment term is expiring in same month, the critics argue that these specific provisions created for any special persons could open the door for political interference and compromise the independence of NEPRA’s transparent and independent regulatory and decision making process and lead to more inefficiencies of the titanic giant sinking ship of power sector and may lead to more inefficiencies, higher stock and increase the flow of circular debt due to transparency compromise, policy and regulatory functions conflict of interest, governance and biased decision making.
It is also argued that if these amendments are that desperate for federal government, which actually are not in any case, even if need arise a proper legislation route could be adopted through parliament for certain legislation instead an overnight ordinance approval by acting president on such constitutional, legal, policy and critical power sector level decision. While adopting this normal procedure of legislation the broader level and actual need assessments and merits are well discussed and debated among stakeholders including other federal and provincial entities and approved by two houses to become a widely accepted and applicable law, if the need is established. This amendment has major impacts at policy, structural and on going market reforms, where it also involves interests of consumers, investors, donors, multilateral, provincial and other federal institutions interests and it can’t be enacted through ordinance passed overnight, if done this may lead and land into crucial local and global controversies in times when the country economy is struggling bridge the macroeconomic conditions addressing deep devaluation, record inflation and balance of payment crisis and around three trillions circular debt stock.
The experts and critics argue that these amendments, if enacted, shall lead to decisions that favor any specific persons and potentially compromising the fair and transparent functioning of NEPRA Authority. There is need and importance of maintaining the independence and transparency of regulatory Authority exercise of powers and conduct to ensure that power sector decisions are made in the best interest of the consumers and sector sustainability. As the draft ordinance makes its way to cabinet approval and the acting president, they should examine its need criticality, legitimacy, urgency and controversies involved and may not let it go in hurry without the having taking in board and seeking comments and observations of critical stakeholders, including consumer rights representatives, industry associations and experts, chambers, opposition parties and other provincial and federal entities, who are urging a thorough review of the proposed amendments and passing through an parliamentary process, if the need is established, to ensure that NEPRA maintains its integrity, independence, and ability to make transparent, impartial decisions that promote a sustainable and efficient power sector development in the larger interests of consumers, investors, economy and prosperity of Pakistan.
