2010 PLP 517 (SCMR)

MIAN SHAKIRULLAH JAN, J.

The various industrial consumers of electric power, aggrieved of the determination of tariff by the National Electric Power Regulatory Authority (NEPRA), challenged the same through constitutional petitions before the High Court and after an order of remand by the High Court, the instant petitions, for leave to appeal, have been filed.

2. The Water and Power Department Authority (WAPDA) is a statutory corporation established under the WAPDA Act, 1958. Section 8 of the WAPDA Act, 1958, dealing with the general power and duties of the WAPDA, was amended through Pakistan WAPDA (Amendment) Act, 1994, and a new clause (vii) in subsection (2) was added to enable WAPDA to privatize or restructure any operations of the authority except the Hydel Generation Power Stations. Towards this reform initiative, an independent statutory body, the National Electric Power Regulatory Authority (NEPRA), was constituted under the Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997, enforced on 16-12-1997. Under sections 46 and 47, necessary rules and regulations were also framed, however, the Electricity Act, 1910, was also kept intact. In the year 1998 the WAPDA's functions of generation, transmission and distribution of electricity were separated. These functions were entrusted to the generation companies (GENCOs), National Transmission and Dispatch Company (NTDC) and distribution companies (DISCOS) respectively. The WAPDA being a licensee for the purposes of Electricity Act, 1910, the WAPDA's new corporate entities were to obtain licenses from NEPRA under the Act of 1997 to carry out their business. The NEPRA was to determine the tariffs, which function was previously performed by the WAPDA/ the Federal Government prior to the establishment of NEPRA, at which the GENCOs were to sell electricity produced to NTDC, the NTDC was to sell the electricity so procured to the DISCOs and the DISCOs in turn were to sell the electricity to their consumers. The NEPRA was also exercising the powers of biannual adjustment and monthly review process in view of increase in oil prices etc. After determination of the tariff the same is sent to the Federal Government for issuance of notification. The Federal Government while notifying the rates determined by the NEPRA used to direct that the consumers be charged at a lower rate specified therein and for which the Federal Government by way of subsidy was to make up for the short fall in the recovery of the tariff so fixed. The tariff is determined by the NEPRA, statedly, in three stages, (a) when the tariff for electricity producing companies (GENCOs), Independent Power Producers (IPPs), is determined, (b) when the tariff of National Transmission of Dispatch Company (NTDC)/Central Power Purchase Agency (CPPA) is determined, and (c) when the tariff is determined for the distribution companies which has been identified as Distribution Margin for the distribution companies (DISCOs). The tariff of the GENCO is added by the NTDC, when it further supplies, to its own tariff/charges for transmission and similarly the DISCOs adds its own tariff/charges to the rate for which it receives the supply for electricity from the NTDC and which (charges of the DISCOs) is called, as evident from the impugned judgment, as Distribution Margin. The former two constitute the main component of the tariff and the lesser component being the Distribution Margin.

3. The tariff of four distribution companies, out of total nine distribution companies in Pakistan, the LESCO, GEPCO, MEPCO and FESCO, was challenged in writ petitions by various industrial consumers of electric powers as determined by the NEPRA before the Lahore High Court which was decided through the impugned consolidated judgment finding some procedural defects in the process of determination by the NEPRA and the High Court remanded the case to the NEPRA for fresh determination in view of guidelines and observations made in the judgment. However, the notification of the Federal Government was not set-aside on the ground that the Federal Government was giving subsidy and the charges of the DISCOs are lesser than the subsidy given and that setting at naught the notification would lead to the DISCOs end up receiving less money from the consumers than the amount they are required to pay to the NTDC resulting in huge financial costs and economic collapse of the distribution companies.

4. The learned counsel for the parties were heard, the impugned judgment examined and the record perused with the assistance of the learned counsel for the parties.

5. Despite the fact that in a way a partial relief has already been given to the petitioners by setting aside the determination of the tariff by the NEPRA and to be determined afresh after giving parties full opportunity of participation, still the same has been challenged by them.

6. The main thrust of the learned counsel for the parties was that the finding so given by the High Court limiting the scope of determination process by the NEPRA to the distribution margin, the charges to be made by the distribution companies, and not including the charges of the GENCOs and the NTDC deprived the petitioners from challenging the charges of the GENCOs and the NTDC, which is the major component of the tariff, that while, setting aside the determination of the tariff by. NEPRA on the basis of which notification was issued by the Federal Government in respect of the tariff automatically falls to the ground as when the base is demolished the superstructure collapses, but in the impugned judgment the same has been kept intact.

7. The learned counsel for the respondents while opposing the contentions of the learned counsel for the petitioners has vehemently argued that the determination of tariff consists of three stages, as referred to above, and at each stage separate determination was made and the petitioners not only did not participate in the proceedings but the same have not been challenged. Regarding the notification he advanced the same reason as noted above i.e. the grant of subsidy by the Federal Government and the Distribution Margin was lesser than the subsidy and that would make no difference and also that would lead to an economic distortion.

8. The contentions of the learned counsel for the petitioners that their challenge was not only to the Distribution Margin but the entire tariff does not seem to be correct as if the proceeding before the NEPRA is taken in different stages, one in respect of the GENCOs, the other in respect of the NTDC and the third for the DISCOs, and they have participated only at the last stage of the determination of the tariff qua the DISCOs. Even their own conduct also speaks against them as they have ' not made the former i.e., the GENCOs and the NTDC, parties in the case, and who must be necessary party in the case. Had the petitioners challenged the determination of tariff in respect of earlier two stages qua the GENCOs and NTDC they would have done so (made them as a party) in the Writ Petitions or before this Court.

9. Since the conclusion of the impugned judgment is the remand of the case to the NEPRA so the petitioners are at liberty to take such objection before the NEPRA if such a challenge is available to them at that stage, and the NEPRA would consider their this objection and can dispose it of according to law/rules. The notification issued by the Federal Government in respect of the tariff is based on the determination of the tariff by the NEPRA along with subsidy component, if the NEPRA arrived at a conclusion different than the one already arrived at then the Federal Government would be free to issue a fresh notification and till then the same would remain in the field.

10. In view of what has been discussed above, we decline leave to appeal in all the listed petitions and the same are dismissed with the observations made above. M.H./F-22/SC???????????????????????????????????????????????????????????????????????? Petition dismissed.