Key Takeaways
- A Nepra member has challenged the Rs. 332 billion revenue requirement for NGC.
- The dissenting note questions the treatment of Rs. 19 billion payable to CPPA.
- Member Amina Ahmed argues this affects the company’s equity base and permissible return.
A Nepra member has raised concerns over the recent approval of a Rs. 332 billion revenue requirement for the National Grid Company (NGC) by the regulatory body.
In her dissenting note, Member Amina Ahmed of Nepra highlighted inconsistencies in the treatment of assets and liabilities, particularly regarding Rs. 19 billion payable to the Central Power Purchasing Agency (CPPA).
According to Ahmed’s argument, this amount should not be treated as a loan while calculating NGC’s equity base, as it has a corresponding receivable that represents untransferred assets under the 2015 Business Transfer Agreement.
Ahmed warned that recognizing only one side of the transaction distorts the company's financial position and results in an inaccurate tariff determination. She suggested either netting off both the liability and receivable or excluding both from the calculation entirely.
The Nepra decision approved a combined revenue requirement of Rs. 332 billion for NGC, covering FY2022-23 to FY2024-25 under the multi-year tariff framework. This was significantly lower than the company’s sought amount of Rs. 478 billion.
Under the approved decision, Nepra allowed Rs. 81.5 billion for FY23, Rs. 95.6 billion for FY24 and Rs. 155 billion for FY25. Use-of-system charges (UoSC) were set at Rs. 382 per kilowatt per month for FY23, increasing to Rs. 710 by FY25.
Ahmed’s dissenting note underscores the importance of accurate financial treatment in tariff determination processes, emphasizing the need for consistency and transparency in regulatory decisions.
Recognizing only one side of the transaction distorts the company's financial position and results in an inaccurate tariff determination.
Amina Ahmed, Member (Tariff and Finance) at Nepra
