NEPRA Rejects Telco’s Plea for Tariff Review
ISLAMABAD: The National Electric Power Regulatory Authority (NEPRA) has rejected the telecom companies’ petition, requesting the revision of the tariff from the commercial tariff to the industrial tariff.
In accordance with a decision by NEPRA, the Authority is of the opinion that the telecommunications companies do not meet the criteria set out in the final tariff determinations for consumers for the application of the “industrial supply” tariff. Accordingly, the petitions are dismissed, NEPRA said.
Pakistan Telecommunications Company Ltd. (PTCL), Telenor Pakistan (Private) Ltd, Pak Telecom Mobile Ltd (PTML), Pakistan Mobile Communication Ltd (PMCL) and Deodar Private Ltd. have filed separate petitions asking the authority to approve the revision of the tariff for telecommunications operators from the commercial to industrial category, in light of the status granted by Government Notification No. l (11)/2004-lnvIIl, dated of 20.04.2004, according to which the telecommunications sector, including cellular operators, has been classified as an industry.
The NEPRA hearing in the matter of the petition filed by PTCL took place on April 05, 2022 during the hearing regarding the petitions of PTML, PMCL and Deodar Pvt. Ltd., was scheduled for 05 July 2022 and brought together the petitioners, the intervener Mr/s CM Pak (Zong), the Ministry of Energy, K-Electric, the Central Electricity Purchasing Agency (CPPA ) and other relevant stakeholders.
The AMF is of the opinion that the term “value added” used in the definition of industry for the purposes of applying the industrial supply rate is used in the context of value added through a process of manufacturing or production. In the event that a broader meaning of the term “value added” is assumed, a large number of commercial activities will fall under the definition of “industry” for the purposes of the electricity tariff, which cannot be l intent of the definition given in the final consumer rate determinations.
It is pertinent to note that the consumer categories currently used in final consumer tariff determinations are mainly the legacy that the electricity sector used under WAPDA as a vertically integrated utility. After the NEPRA Act was amended in 2018, the power to prescribe categories of consumers was specifically given to the federal government. Similarly, in the rate determinations for end consumers, “industrial supply” is defined as “industrial supply means the supply for bona fide industrial purposes in factories, including the supply required for offices and for the operation standard in the industry”. Further, “line of business” is defined as “a bona fide business or establishment engaged in the manufacture, value addition and/or processing of goods”.
The words “Industrial Supply means the supply for bona fide industrial purposes in factories”, as used in the definition of Industrial Supply, indicate the intention to apply the Industrial Supply Tariff to industries involved in certain manufacturing or production activities.
According to the Pakistan Factories Act 1934, a “factory” means any premises, including its compound, in which ten or more workers work or have worked on any day in the preceding twelve months, and in any part of which a process of manufacture is operated or is customarily operated with or without the aid of energy, but does not include a mine, subject to the application of the Mines Act, 1923 (IV of 1923):
As such, companies in the telecommunications sector cannot be called factories; therefore, in the considered opinion of the Authority, this may not qualify the criteria for applying the tariff in the “industrial supply” category, said NEPRA in its judgment.
Telecom operators in Pakistan provide mobile and broadband services to 188 million subscribers with an annual turnover of over Rs. 400 billion, creating 25,000 direct and indirect jobs. The telecommunications sector has brought in foreign direct investment of over $10 billion to date and continues to do so in the form of license renewals, spectrum fees, and more.
Meanwhile, Federal Minister of Information Technology and Telecommunications, Syed Amin Ul Haque, has expressed concern over NEPRA’s decision to reject the telecommunications companies’ request to grant the tariff. industrial electricity.
In a statement, he said that the telecommunications sector has been given industry status by the government and we believe it is the right of telecommunications companies to obtain electricity tariffs at industrial rates.
He added that the issue is not only limited to the telecommunications sector, but can be an important step towards providing better facilities to consumers and attracting foreign investors.