ISLAMABAD: The National Electric Power Regulatory Authority (NEPRA) on Tuesday launched a forceful critique of the power Distribution Companies (Discos) as they sought substantial increases in security deposit rates, a move allegedly encouraged by the Power Division. The authority, which has often found itself at odds with the Discos, announced it would withhold its decision on the proposed hike until a thorough audit of current security deposits was completed.
In a tense hearing, NEPRA members—Rafique Ahmad Shaikh, Mathar Niaz Rana, Amina Ahmed, and Maqsood Anwar Khan—expressed their dissatisfaction with the case presented by the Discos’ representatives, led by Irfan Butt from Gepco. According to NEPRA, the Discos’ case appeared weak, repeating the same arguments from previous discussions. The proposed hike was perceived as an attempt to offload the financial burden of Discos’ operational inefficiencies onto consumers.
In a noteworthy absence, no representative from the Power Division—the entity that had allegedly prompted the Discos to file their petitions—attended the hearing. This absence was interpreted by many as an attempt to avoid direct scrutiny from NEPRA. However, NEPRA was clear in its stance, instructing K-Electric and Sukkur Electric Supply Company (LESCO) to submit similar petitions, as any increase in security deposits would be implemented uniformly across the country under a standard tariff structure.
The proposal, which aimed to raise security deposits significantly, was met with strong opposition from various interest groups. Prominent voices, including Arif Bilwani, Tanveer Barry, Imran Shahid from JI, Asim Riaz from APTMA, and others from the Lahore Chamber of Commerce and Industry, rejected the increase, arguing that it stemmed from the Discos’ own mismanagement and inefficiencies.
A pivotal question that loomed over the discussions was whether these increases would apply to mosques and military installations—an issue that neither NEPRA nor the Discos could adequately address.
The proposed hike, designed to cover defaults by consumers, would affect all existing users. To ease the financial strain, payments for the increased security deposits were suggested to be collected in installments. However, Mathar Niaz Rana, NEPRA’s Member (Tariff), raised alarms about the current authenticity of deposit rates, with NEPRA’s audit team already identifying discrepancies in deposits across three of the Discos.
There were also concerns within NEPRA that raising the security deposits could inadvertently push more consumers towards alternative energy solutions, such as solar power, thereby reducing demand and revenues for the Discos. Irfan Butt, from Gepco’s MIRAD division, acknowledged that this shift to solar energy could further dampen consumer demand.
Representatives from the Karachi Chamber of Commerce and Industry (KCCI) voiced particular concern over the proposed increase, especially for industries. Tanveer Barry pointed out that the security deposit increase—from Rs 2,010 to Rs 54,783—would be an unbearable financial burden for businesses, forcing them to consider alternative energy sources, such as solar, to mitigate costs. He cited figures from NEPRA’s State of Industry Report 2024, revealing a massive gap between sanctioned load and peak demand in both K-Electric and Discos, arguing that the security deposit increase was an attempt to justify inefficiencies by imposing higher costs on consumers.
Barry and others pointed out that Discos’ inflated sanctioned loads, in relation to actual capacity, were driving up security deposits. According to NEPRA’s report, the sanctioned load for the ten Discos was far greater than their peak demand, indicating that consumers had been overcharged for energy they would never consume.
Aamir Sheikh, a representative from the industrial sector, weighed in by highlighting the financial strain industries would face due to these proposed increases. He underscored the challenge of paying Rs 25-30 crore in additional security deposits, suggesting that such a move would further burden an already struggling industrial sector. Sheikh emphasized that these funds, if available, would be better utilized in expanding industry and creating jobs rather than covering Discos’ inefficiencies.
Arif Bilwani, meanwhile, argued that the Discos were guilty of inflating their sanctioned loads, resulting in inflated security deposits being collected from consumers. His comments reinforced the growing sentiment that the proposed rate hikes were unjustified, especially given the large discrepancies between Discos’ sanctioned capacities and actual demand.
As the hearing concluded, NEPRA’s Member (Technical), Rafique Ahmad Shaikh, made his position clear: without concrete guarantees of improved service, including an end to the 10-15 hours of load shedding, NEPRA would not approve the proposed hike in security deposits. He also stressed that the authority would wait for the final audit report from its team before making a decision.
In a final note, Shaikh’s criticism of the Discos’ case left no doubt that NEPRA was determined to hold the Discos accountable for their performance and ensure that any decision taken would prioritize the interests of consumers.
For now, the Discos’ push for higher security deposits remains in limbo, with NEPRA’s final determination dependent on the outcomes of ongoing audits and the resolution of key questions about the efficiency and fairness of the Discos’ operations.
