No change in NEPRA’s domain after mediation pact between KE and KWSB: ECC

ISLAMABAD: The government has decided that any change in the mediation agreement or the outcome of mediation between K-Electric (KE) and Karachi Water and Sewerage Board (KWSB) shall not encroach upon the regulatory domain of National Electric Power Regulatory Authority (NEPRA), sources told Newzshewz.
Sharing the details, sources said, that Power Division briefed the ECC on Feb 3, 2025 that in order to resolve subject issues/disputes related to K- Electric (KE), the then Prime Minister of Pakistan constituted a Task Force on June 10. The recommendations of the Task Force with respect to multiple agreements (Power Purchase Agency Agreement, Inter Connection Agreement, Tariff Differential Subsidy Agreement and Mediation Agreement) were approved by the Federal Government on December 16, 2023 and accordingly a Mediation Agreement was executed. Clause 2 of the Mediation Agreement specified the below mentioned claims for mediation: (i) what is the amount of outstanding receivables of KE from KWSB? (ii) what is the amount of Tariff Differential Subsidy (TDS) owed by GoP to KE, including but not limited to any claims accrued to KE in respect of Tariff Differential Subsidy, but are pending due to any procedural delays? (iii) what is the amount payable by KE to NTDC/CPPA-G? ;(iv) what is the amount Payable by KE to SSGC? ; and (v) whether any other payments are due to the Parties with respect to the claims.
The Power Division further briefed the forum that the clause 3(d) of the Mediation Agreement specified timelines for the mediation as follows “the Mediator shall render his determination in writing in relation to all claims submitted before him within sixty days from the date of appointment as Mediator, extendable by a further thirty; days if mutually agreed upon by all Parties”.
The Power Division apprised the forum that the mediation process commenced by the appointed Mediator Ashtar Ausaf Ali on March 04, 2024 but KWSB refused to participate in the mediation process through a letter of January 13, 2024 and did not join the proceedings despite efforts of the Mediator. KE brought claims regarding: (i) amounts allegedly owed by KWSB to it, against GOP in absence of KWSB (the “KWSB Claim”); and (ii) certain purportedly verified and unverified claims of tariff differential subsidy pending before GoP (the “TDS Claim”). The position of GoP (Finance Division) to the extent of purportedly verified TDS claims was noted in Annex-IV of the summary. NTDC/CPPA-G filed a statement of claim for amounts owed by KE against supply of electric power by NTDC/CPPA-G.
SSGC also filed a statement of claim regarding amounts owed by KE to it. Moreover, KE had also claimed certain amounts on account of its claims in the nature of write off, end of term adjustment, new MYT 2024 to 2030 and other pending claims, which were yet to be determined by NEPRA as prudent and part of its tariff and thereafter in respect of which the Federal Government was yet to take a policy decision for allocation of subsidy (the “Additional Tariff and Subsidy Claim”).
A chronology of the key events in the mediation proceedings was set out which showed that the participating parties took multiple steps in the proceedings and owing to the complexity of the issues, the mediation proceedings could not be completed within the envisaged timeline. Further, KWSB refused to participate in the mediation process. Moreover, the issues in respect of Additional Tariff and Subsidy Claim, particularly, in the context of determination of whether such claims, are prudent or otherwise fell within the exclusive domain of the regulator (NEPRA) under section 7 read with 31 of the Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997. Once so quantified and determined by NEPRA, the tariff so determined shall be notified by the Federal Government keeping in view its fiscal targets and budgetary constraints and allocations. Therefore, the amounts claimed, and their adjustment (6) were beyond the scope of clause 2 of the Mediation Agreement, and any such exercise would also be an encroachment on the legal and regulatory domain of NEPRA and dispensation of duties by the Federal Government under the Constitution of Islamic Republic of Pakistan, 1973.
The Power Division submitted following proposal for consideration of the ECC: “amendment of the Mediation Agreement to provide fora further period of sixty days from the date of approval for concluding the mediation process only in respect of claims specified being within the scope of clause 2 of the Mediation Agreement”.
During the ensuing discussion, the forum was informed that the instant case was also discussed at SIFC where it was decided to request the ECC to extend the agreement by 90 days, instead of 60 days, for a smooth conclusion.
The Economic Coordination Committee (ECC) of the Cabinet considered the summary of January 10, 2025 submitted by the Power Division regarding “Amendment of Mediation Agreement of February 16, 2024 pertaining to claims of KE for Tariff Differential Subsidy and KWSB and Payables of KE to different State-Owned Enterprises (CPPA/NTDC and SSGC)” and approved the proposal of Power Division to amend the Mediation Agreement to provide fora further period of ninety days from the date of approval for concluding the mediation process only in respect of claims specified in the summary being within the scope of clause 2 of the Mediation Agreement.
The forum further directed the Power Division that any change in the mediation agreement or the outcome of mediation shall not encroach upon the regulatory domain of NEPRA.
Ends