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CPEC security costs

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THE inevitable is now slowly coming to pass. Costs that were not originally part of the tariffs granted to CPEC power projects are being passed to consumers, starting with the added cost of security. When Nepra, the power regulator, first took suo motu notice of a summary approved by the Economic Coordination Committee, which approved the “issuance of a policy directive to Nepra to allow 1pc of the capital cost” of all CPEC projects to pay for security expenses, it appeared that the idea was to examine the legality of such a “policy directive”, as well as the merits of bundling security costs into the tariff. But in the decision released on Thursday, it turns out Nepra was only going through the motions with the intention of bowing to the demands of the ECC. Not only was notice of the matter taken under peculiar circumstances, but the reasoning employed in the determination also shows that something fundamental has changed in the relationship between the regulator and the government.

First of all, deciding such an important matter under a suo motu hearing without requiring the government to submit a proper petition calls for some explanation. Second, when it was suggested during the hearing that the provision of security was the government’s responsibility and should not be charged from the consumers, Nepra responded by saying such costs would be met from public funds in any case, so why not bundle them into the tariffs granted to the respective projects. This is truly extraordinary reasoning on the regulator’s part, and implies that the protection of consumer interest, which ought to be Nepra’s priority, has now been sacrificed at the altar of bureaucratic self-interest. Third, the determination argues that the measure does not entail special treatment for IPPs coming under the CPEC umbrella since the implementation agreements of the others also allow for security costs to be part of the tariff. This is disingenuous, because the determination twice makes reference to the CPEC security force, and the mechanism for the payment clearly shows the costs in question relate to it, and this force is not there for the protection of all IPPs. This determination has opened the door to new large-scale escalations in the cost of CPEC power projects in the years to come, something for which the public should now brace itself.

Attabad Tunnel-Hunza


Courtesy: Published in Dawn, August 7th, 2017

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