APTMA challenges Rs 70 billion NHP payment to KP government with retrospective effect

APTMA challenges Rs 70 billion NHP payment to KP government with retrospective effect

The All Pakistan Textile Mills Association (APTMA) has challenged the payment of Rs 70 billion Net Hydel Profit (NHP) and arrears to the Government of Khyber Pakhtunkhwa for FY 2015-16 with retrospective effect.

The APTMA had filed a motion for leave for review under section (16) clause (6) of the Tariff Standards and Procedure Rules, 1998 on June 2, 2016 and argued that the retrospective implementation would be a violation of the Articles 4 and 25 of the Constitution of Pakistan, which bars from discriminatory treatment with citizens.

Moreover, it is also contempt of the Supreme Court of Pakistan, which has ruled out the retrospective implementation of levies as illegal and unlawful. It said the retrospective implementation is a clear victimisation of the new customers as to why their cost of electricity should include past cost of electricity which they never used. Furthermore, why the recovery should not be made from the customers, who have been disconnected from the system but used electricity in the previous years to which this cost relates to.

The issue of the rate at which hydel profit will be paid by the federal government to KP government has long been a controversial dispute and could not be settled due to multiple reasons.

The Council of Common Interest (CCI) had approved on March 14, 2013 that the WAPDA and the Ministry of Water and Power may immediately approach the NEPRA through a tariff petition under the law for uncapping and inclusion of the NHP at 1.10 together with annual indexation at 5 percent payable to KP government. This change in tariff was likely to take effect from 01/07/2013.

It was followed by signing of a Memorandum of Understanding between the federal government and the KP government on 25/02/2016 for payment of a total amount of Rs 70 billion inclusive of arrears for NHP after seeking concurrence of CCI, which was accorded on 29/02/1016. The recovery of NHP and arrears was planned to be made in four instalments ie Rs 25 billion in current fiscal year and Rs 15 billion each in the next three fiscal years.

The CCI had also directed the WAPDA to file a tariff petition to recover the amount.

WAPDA filed a revised supplementary tariff petition before NEPRA on 20/04/2016 for payment of NHP and arrears to the KP government and requested to approve the supplementary tariff at Rs 3.01 for payment of NHP arrears to the KP government during one year from date of notification in addition to regular tariff for NHP already determined by NEPRA in bulk supply tariff determination dated 08/01/2016.

APTMA intervened and pleaded on May 5, 2016 that the revised NHP rate determined by NEPRA on 08/01/2016 cannot be implemented retrospectively and this burden should only be borne by the federal government.

NEPRA decided in the matter of tariff petition filed by WAPDA Hydroelectric for payment of NHP and arrears to Khyber Pakhtunkhwa on May 25, 2016. It accepted the petition for modification of tariff filed by WAPDA Hydroelectric partially and additional tariff is hereby assessed for WAPDA hydroelectric on the basis of expected installed capacity of 6902.4MW. This tariff would be subject to adjustment in case there is any change in expected installed capacity of 6902.4MW during the respective applicable period.

NEPRA sent the above order of the Authority to Secretary Water & Power on May 25, 2016 for notification in the official gazette with under intimation to Secretary, Cabinet Division, Cabinet Secretariat, Islamabad and Secretary, Ministry of Finance, Government of Pakistan, Islamabad. On July 26, 2016, the NEPRA heard the APTMA review petition and reserved the decision. APTMA is yet awaiting the decision and planning to move to the higher court in case a decision against it.

Copyright Business Recorder, 2016

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