SH. AZMAT SAEED, J. --- This order shall dispose of Writ Petitions 13878, 10681, 10898, 14158, 14159, 14044, 14045, 14145, 14143, 14048, 14149, 13502, 13501, 13500, 13498, 13496, 13497, 14703, 14716, 14719, 14582, 14588, 14539, 14540, 14501, 14439, 14427, 14613, 14612, 14611, 14610, 14609, 14591, 14590, 15672, 15125, 14861, 14021, .14335, 10900, 10901, 14349, 14348, 14336, 14337, 11918-, 1721 RWP, 10897, 10605, 12597, 13876, 1'3877, 13879, 18052, 16631, 15758, 16013, 16185, 15673, 15674, 15675, 15676, 15677, 1950, 4948, 10899, 14589, 15679, 15680, 15700, 14350, 14351, 14352, 14353, 14373, 14374, 14375, 14376, 14398, 14399, 14400, 14403, 14404, 14412, 14426, 14425, 14418, 14415, 14413 of 2008 and 102, 545, 546, 277, 1108, 1227, 1235 & 1276 of 2009.
2. All the aforesaid writ petitions have been filed by various consumers of the electric power to challenge the tariffs of various distribution companies (DISCOs) as determined by National Electric Power Regulatory Authority (N.E.P.R.A.) in exercise of the powers conferred under the N.E.P.R.A. Act No. XL of 1997 and the subsequent Notifications, issued by the Government of Pakistan on the basis of the aforesaid determination by N.E.P.R.A. The tariff determination and the notification issued thereupon pertains to Lahore Electric Supply Company (L.E.S.C.O.), Gujranwala Electric Supply Company (G.E.P.C.O.), Multan Electric Supply Company (M.E.P.C.O.) and Faisalabad Electric Supply Company (F.E.S.C.O.). The challenge thrown through these Constitutional Petitions in respect of the tariff determination and notification pertaining to the afore-said D.I.S.C.Os. Other than F.E.S.C.O. Originally challenged. Several determinations and notifications. However, this Court vide its earlier order with the consent of the parties, remitted the said matters back to the N.E.P.R.A. Except tariff determinations for the year 2008-2009, which are the subject-matter of the present lis pertaining to the said DISCOs.
Furthermore, the matter relating to F.E.S.C.O. Under challenge is with reference to bi-annual adjustment. In all the afore-said Constitutional Petitions, common questions of law are involved, hence, they are being decided through this single order.
3. Mr. All `afar, Advocate who is counsel for the petitioners in many of the afore-said petitions contends that N.E.P.R.A. Is a regulatory body created under the N.E.P.R.A. Act, 1997 whose primary duty is to determine the tariff required to be paid by consumers, and in this behalf is enjoined by law to protect the interest of the consumers. Adds that the Act the Rules framed thereunder provide a complete regime consisting not only of the procedure but also the standards on the basis whereof such tariff is to be determined. He referred to Section 31 of the N.E.P.R.A. Act to contend that the procedure and standards are to be provided by rules to be framed and National Electric Power Regulatory Authority Tariff Standard and Procedure Rules, 1998 have been issued in this behalf, whereunder, the consumers have a, right to be heard and are entitled to complete and full hearing. And that even otherwise, the proceedings before N.E.P.R.A. While determining the tariff are not adversarial in nature but inquisitorial. In support of his contentions learned counsel referred to various provisions of Rules of 1998, more particularly, Rules 3 to 6 and Rule 9. Reference has also been made to Rules 10, 11 and 15. Emphasis was also laid upon Rule 17.3. Learned counsel added that not only the prescribed procedure was to be adopted by N.E.P.R.A. For its determination, but the process also must be meaningful and every effort is required to be made to reach a just and informed determination disclosing reasons thereof. It was further contended that for arriving at such a decision if so required, issues must be framed by N.E.P.R.A., and the parties allowed to lead oral as well as documentary evidence inclusive of a right of cross-examination.
4. In the instant case, it is contended that the procedure in question was violated. With reference to L.E.S.C.O., M.E.P.C.O. And G.E.P.C.O. Intervention petitions had been filed. In the case of L.E.S.C.O., it was admitted for hearing, however, without either framing of issues or allowing the parties ^ to produce evidence, a determination was arrived at. The hearing lasted only one day. The original determination which is identified as a short order did not contain any reason whatsoever. It is further added that the objections taken in the intervention petition were also not dealt with in the short order. Subsequently, detailed reasons were released, which too were based on extraneous and irrevlavent reasons beyond the ambit of law, N.E.P.R.A. Act and the Rules framed thereunder.
The objections taken in the intervention petition were neither dealt with nor adjudicated upon. The contentions of the interveners to bring on record relevant material to test the veracity of the information supplied and made available by the D.I.S.C.Os. Were ignored, and such alleged material was taken as a gospel truth and evaluated on considerations which were alien to the scheme of law and in violation of the provisions thereof. In particular it is contended that there is no determination whether the expenses allegedly incurred or to be incurred by D.I.S.C.Os. In question were prudently incurred to meet the requirements of the consumers as enjoined by Rule 17.3 of the N.E.P.R.A. Rules. No explanation or reasons or basis for 20% return on assets is available in any of the orders. No explanation for allowing operating expenses to the extent claimed by D.I.S.C.Os. Is decipherable from the impugned orders of N.E.P.R.A. The rationale for the cross subsidy is conspicuous by its absence and no explanation is available in the orders as to whether the operating costs as claimed by individual D.I.S.C.Os. Have been prudently incurred. Similarly, the matter relating to the deposits made by consumers by way of security and capital investments have been ignored and such assets which in fact do not belong to D.I.S.C.Os. Have been included in the assets base for determining the Rate of Return. It is also contended by the learned counsel that line losses have been permitted without any rationale or uniform basis to the grave prejudice of the consumers.
5. In the above context, it is contended that the determination orders of N.E.P.R.A. Impugned herein have been passed in violation of the specific provision of N.E.P.R.A. Act and the Rules framed thereunder against the principle of natural justice and not only the procedure prescribed has been violated but the standards required to be maintained have been ignored, as a consequence whereof, the impugned determination orders are a nullity, therefore, the notifications issued by the Government of Pakistan on the basis thereof are equally a nullity, hence, liable to be struck down.
Adds, that said orders are subject to judicial review and would fall within the sub specie of commercial judicial review. Hence, this Court not only has ample jurisdiction to entertain these petitions but is fully empowered to set aside the notifications issued. In support of his contentions, learned counsel relies on:
(1) 2001 CLC 342 Lahore (Malik Nisar Ahmed v.
Messrs Kohistan Goods Forwarding Agency and 4 others).
(2) 1984 SCMR 1014 (Muhammad Ibrahim Khan v. Secretary, Ministry of Labour and others).
(3) PLD 2004 Supreme Court 219 (Hafiz Abdul Waheed v. Mrs. Asma Jehangir and others).
(4) 2004 CLC 1922 Lahore (Muhammad A.I Shah and others v. Election Tribunal (Union Council No. 49 Narhal) District Khanewal and 4 others).
(5) 1990 CLC 1086 Karachi (Muhammad Ramzan v. Trustees of Port of Karachi).
(6) PLD 1989 Lahore 38 (Mst. Yasmin Zafar v. Muhammad Anwar Khan and others).
(7) PLD 1999 Karachi 417 (The Secretary Auqaf Department, Government of Sindh, Karachi South and 3 others v. Syed Sher A.I Shah and 9 others).
(8) 2008 SCMR 723 (Town Committee PipIan through Tehsil Nazim, Tehsil Piplan/Nazim Union Council PipIan v. Muhammad Hanif and others).
(9) 2007 SCMR 330 (Abdul Majeed Zafar and others v. Governor of the Punjab through Chief Se creta ry).
(10) 2006 SCMR 1225 (Peer Mukaram-ul-Haq v. National Accountability Bureau (NAB) through Chairman and others).
(11) PLD 2004 Supreme Court 271 (Brig. Muhammad Bashir v. Abdul Karim and others).
(12) PLD 1970 Supreme Court 173 (Mollah Ejahar All v. Government of East Pakistan and others).
(13) PLD 2006 Lahore 76 (Qaiser Nadeem Saqi v. District Co-ordination Officer (DCO), Hafizabad and 8 others).
(14) 2006 CLD 743 Lahore (Messrs S.A. Corporation through Partners and 2 others v. Bank of Punjab through Manager).
(15) 1989 MLD 3319 Lahore (Muhammad Akram Warraich v. Atta Muhammad Naz, Civil Judge).
(16) 2003 PTD (Trib.) 1580; PLD 2008 Lahore 452 (Raia Ashfaq Sarwar v. Shahid Orakzai and 3 others).
(17) 2002 PTD 2799 Lahore High Court (Messrs Punjab Provincial Cooperative Bank Ltd., Lahore v.
Deputy Commissioner of Income Tax, Circle II, Company Zone I, Lahore and another).
(18) 2005 YLR 160 Lahore (Hassan Din through his legal heirs and 9 others v. Member (Judicial-I), Board of Revenue, Punjab and 75 others)
(19) PLD 2007 Karachi 597 (Raja Muhammad Zarat Khan and another v. Federation of Pakistan through Secretary, Ministry of Cabinet Division and 2 others).
(20) 2007 MLD 345 Lahore (Muhammad Waris v. Province of Punjab through Collector E.D.0.(R.), Bhakkar and others).
(21) 2008 YLR 1032 Lahore (Muhammad Sarfraz v. Asghar Yasin and 2 others).
(22) 2008 CLC 278 Lahore (Anwar All and 7 others v. Government of the Punjab through District Officer Revenue, Jhang and 10 others).
(23) 2002 CLC 4 Peshawar (Abdul Zahir v. Haji Gulab).
(24) 2001 CLC 820 Lahore (Petrosin Products Pakistan (Pvt.) Limited v. Federation of Pakistan through Secretary Privatization Commission, Ministry of Finance, Government of Pakistan, Islamabad and 5 others).
(25) 2001 SCMR 934 (Pakistan International Airlines Corporation (P/AC) through Chairman and another v. Nasir Jamal Malik and others)
(26) 2003 CLC 119 Karachi.
(27) 2007 SCMR 1240 (Sargodha Textile Mills Limited through General Manager v. Habib Bank Limited through Manager and another).
(28) 2006 MLD 1451 Lahore (Fahmida Akhtar v. Ghaffar Ahmed and 2 others).
(29) 2006 CLC 92 Quetta (Water and Power Development Authority through Chairman and 3 others v. Mir Khan Muhammad Khan Jamali and another).
(30) PLD 1964 Supreme Court 410 (Commissioner of Income Tax, East Pakistan v. Fazlur Rehman).
(31) PLD 1976 Karachi 481 (Miss Tayyaba v. The Controller of Examinations, B.I.S.E., Hyderabad, Sindh and 2 others).
(32) PLD 1958 Supreme Court (Pak.) 437 (The Tariq Transport Company, Lahore v. The Sargodha- Bhera Bus Service, Sargodha (2) The Regional Transport Authority, Lahore, and (3) The Provincial Transport Authority, Lahore).
(33) PLD 1958 Supreme Court (Pak.) 499 (Abdul Aziz alias Labha and others v. The Province of West Pakistan).
(34) PLD 1963 (W.P.) Karachi 551 (Muhammad Ayub Khan v. The Custodian of Evacuee Property and others).
6. Mian Mahmood Rashid, Advocate, who also represents the petitioners in several other Constitutional Petitions contended that in addition to what has been urged by Mr. A.I Zafar, Advocate, N.E.P.R.A. Had failed to appoint independent Chartered and Cost Accountants to verify the figures made available by D.I.S.C.Os., and in absence of such verification, a determination has been made to the prejudice of the consumers. It is also contended that in the case at hand, issues ought to have been framed. No reasons have been given as to why such course of action was not taken by N.E.P.R.A. Adds that full opportunity was not given to the interveners to produce evidence, which-would have easily contradicted the material supplied by D.I.S.C.Os. On the basis whereof determinations have been made. Learned counsel contends that the operating costs are exaggerated, Rate of Return on the fixed assets allowed by N.E.P.R.A. Is whimsical and without any legal or factual basis. For purposes of the afore-said calculation assets which in fact and in law belong to the consumers have been allowed to be considered. There is an irrational cross subsidy and N.E.P.R.A. Has failed to treat, textile sector as a separate entity. The matter of security deposits of the consumers has been ignored. It is further contended that annul adjustments has been added to the tariff illegally and without any legal or factual basis. Learned counsel further contends that the law i.e., the N.E.P.R.A. Act and the Rules framed thereunder perceive of a single order while in the instant case, two orders have been passed in violation of law. Neither of the two orders is sustained by valid reasons. The same qualify as a non-speaking orders and are liable to be set aside on this ground alone. It is reiterated that fair chance of hearing was not given to the parties and, thereby both the letter and spirit of the N.E.P.R.A. Act and the Rules framed thereunder have been violated. In this regard, learned counsel referred to various provisions of the N.E.P.R.A. Act and the Rules to highlight his submission Learned counsel has taken cavil with the alleged determinations, Distribution Margins, depreciation and t Rate of Return allowed contending that such alleged determinations were not only without any legal and factu basis but do not contain any reasons supporting th determination in this behalf. To substantiate his contention learned counsel relied on:---
(1) PLD 1971 Supreme Court 61 (Atta Muhamma Qureshi v. The Settlement Commissione Lahore Division, Lahore and 2 others).
(2) PLD 2002 Karachi 83 (Messrs Noora Traders, Karachi through Managing Partner Pakistan Civil Aviation Authority through Airpo Manager, Karachi).
(3) 2005 SCMR 100 (Ikram Bari and 524 others National Bank of Pakistan through Presiden and another).
(4) PLD 2001 Supreme Court 61 (Messrs ltteha Cargo Service and 2 others v. Messrs Sye Tasneem Hussain Naqvi and others).
(5) -2005 PTD 152 (Ch. Muhammad Hussain an others v. Commissioner of Income Tax}.
(6) 2007 MLD 157 (Messrs Popular Boards (Pvt. Ltd. v. Custom, Excise and Sales Ta Appellate Tribunal and others).
(7) PLD 1970 Supreme Court 173 (Mollah Ejha All v. Government of East Pakistan an others).
(8) 2007 PTD 228 (Messrs Popular Boards (Pvt. Ltd. v. Custom, Excise and Sales Ta Appellate Tribunal and others).
(9) 2007 SCMR 307 (Raja Humayun Sarfraz Khan and others v. Noor Muhammad).
(10) PLD 2007 Lahore 341 (Haji Khuda Bukhsh and 9 others v. Deputy Registrar Co-operative Societies, Punjab, Lahore and 2 others).
(11) PLD 1959 Supreme Court (Pak.) 272 (Adamjee Jute Mills Ltd. v. The Province of East Pakistan and others).
(12) 2007 MLD 335 Karachi (Faisal Jameel v. The State).
(13) PLD 2006 Karachi 531 (Muhammad Hanif Khan v. Province of Sindh through Secretary, Land Utilization Department, Karachi and 8 others).
(14) PLD 2003 Karachi 667 (College of Physicians and Surgeons Pakistan v. Wafaqi Mohtasib and others).
(15) 2005 SCMR 678 (Hazara (Hill Tract) Improvement Trust through Chairman and others v. Mst.
Qaisra Elahi and others).
(16) 2001 CLC 681 Lahore (Network Television Marketing Ltd. v. Government of Pakistan and another).
(17) PLJ 1997 SC 739 (Messrs Gadoon Textile Mills and 814 others v. WAPDA and others).
(18) PLD 2003 Lahore 741 (Dr. Fozia Amber v. Government of Punjab and others).
(19) 2007 SCMR 818 (Muhammad Tariq Khan v. Khawaja Muhammad Jawad Asami and others).
(20) 1984 SCMR 1014 (Muhammad Ibrahim Khan v. Secretary, Ministry of Labour and others).
(21) 2004 CLD 1109 Karachi (Additional Registrar of Companies, Securities and Exchange Commission of Pakistan, Company Registration Office, Karachi v. Messrs Norrie Textile Mills Limited).
(22) 2007 SCMR 1169 (Muhammad Khan and others v. Province of Punjab and others).
(23) 2003 CLC 1196 Karachi (Messrs Ahmed Clinic v. Government of Sindh and others).
(24) 2002 MLD 1233 (Supreme Court (AJ&K) (Syed Ashiq Hussain and 3 others v. Muhammad lqbal Chughtai).
(25) 2007 CLC 1483 (Manzoor Hussain v. Shahid A.I and 11 others).
(26) 2007 SCMR 1835 (Executive District Office (Education), Rawalpindi v. Muhammad Younas).
(27) 2005 MLD 1844 Lahore (Messrs Fuel Auto Supply Company through Managing Partner and 6 others v. Federation of Pakistan through Secretary, Ministry of Communications and others).
(28) 2007 YLR 2038 Karachi (Muhammad Daiem Shattari v. The State).
(29) PLD 2007 Supreme Court 93 (Shoukat All v. The State).
(30) PLD 2006 Karachi 530 (Farrukh Niaz v. Federal Government of Pakistan).
7. All other counsels representing the other petitioners have adopted the arguments advanced by M/s. A.I Zafar and Mian Mahmood Rashid, Advocates.
8. Learned counsel appearing on behalf of N.E.P.R.A. Attempted to defend the determinations made by the said regulatory authority by controverting the contentions raised on behalf of the petitioners. It was canvassed that full right of hearing was given and determinations made in accordance with N.E.P.R.A. Act and N.E.P.R.A. Rules.
9. Mr. Ijaz-ul-Ehsan, Advocate who represents 'one of the D.I.S.C.Os. Contends that in respect of any tariff determination under the N.E.P.R.A. Act and the Rules framed thereunder with reference to a D.I.S.C.O. Is limited only to the Distribution Margin payable to the said D.I.S.C.O. Which forms a small part of the tariff and this Distribution Margin alone was the subject-matter of the determinations which have been challenged in the instant writ petitions. Adds that the substantial portion of the tariff as was determined, consists of the amounts required to be paid to the National Transmission and Dispatch. Company N.T.D.C. By D.I.S.C.Os., which is also determined by N.E.P.R.A. And such determination has not been challenged nor is the subject-matter of the lis before this Court. Similarly N.T.D.C. Is also required to be pay an amount to the generation companies which too is also determined by N.E.P.R.A. And forms part of the amount payable by D.I.S.C.Os. To the N.T.D.C. In the instant case, such determination for amounts payable to the various generation companies has not been challenged and are also not the subject-matter of the lis before this Court. Thus it was reiterated that the only matter in issue before the N.E.P.R.A. Was the Distribution Margin of the D.I.S.C.Os., hence, the same is at best the subject-matter of the /is before this Court. Learned counsel further added that tariff as determined by N.E.P.R.A. Is not ipso facto applicable to the consumers i.e., the petitioners as thereafter a notification is to be issued by the Government of Pakistan which currently pays subsidy and thereby reduces the tariff as determined. It is contended that in each & every case, the quantum of the subsidy being paid is more than the Distribution Margin claimed by individual D.I.S.C.Os. And determined by N.E.P.R.A. Vide its impugned determinations. Subsidy being paid by the Government of Pakistan is not a C.L.R. matter of right nor can be subject-matter of these Constitutional Petitions. Thus in pith and substance, even all the contentions raised on behalf of the petitioners are accepted and entire Distribution Margin awarded to the D.I.S.C.Os. Is eliminated from the determination it could have no financial Impact and the notification issued by the Government of Pakistan would remain effective.
Learned counsel identified the Distribution Margin allowed be N.E.P.R.A. And incorporated in the various determination alongwith the subsidy per unit being given by the Government of Pakistan to emphasize the point that sale subsidy is more than Distribution Margin. In the alternative, the learned counsel further contended that in the facts and circumstances of the case, the procedure as prescribed by law and the standards required to be maintained have been followed. Learned counsel went over the various provisions of N.E.P.R.A. Act and the N.E.P.R.A. Rules to highlight the procedure as laid down and identified the standards required, to be maintained and dilated upon the purpose of law.
10. It was further contended that N.E.P.R.A. Is not a Court and is therefore not required to make adjudications in the form of judgments of a Civil Court. N.E.P.R.A. Is a regulatory authority and established for particular purposes and objects and that the impugned determinations available on record are supported by reasons and material to justify the same. Adds that full right of hearing was granted and material available was considered and appropriate orders and determination made. Further contends that the petitioners have an alternate remedy by filing a fresh tariff application or seeking review of the existing disputed tariffs, hence, these writ petitions are not maintainable. Further reiterates that disputed questions of fact have been raised, which cannot be resolved by this Court in the exercise of its Constitutional jurisdiction.
11. Mr. Muhammad Ilyas Khan, Advocate for one of the D.I.S.C.Os. In addition to the contentions raised above , stated that the case of petitioners in their respective writ petitions was factually incorrect and untenable in law. Adds that all matters required to be considered were dealt with and considered. Intervention Petitions were also dealt with and considered and all disputes raised therein decided and determined by N.E.P.R.A. And in the above context, the writ petitions being without any merit are liable to be dismissed.
12. Parties heard. Record perused. N.E.P.R.A. Has been established under Section 3 under the National Electric Power Regularity Authority XL of 1997. The powers and functions of N.E.P.R.A. Are set forth in Section 7 of the Act which reads under:---
7. Powers and functions of N.E.P.R.A.-
(1) N.E.P.R.A. Shall be exclusively responsible for regulating the provisions of electric power services.
(2) In particular and without prejudice to the generality of the foregoing power, only N.E.P.R.A.
Subject to the provisions of in subsection (4), shall:
(a) grant licenses for generation, transmission and distribution of electric power;
(b) prescribe procedures and standards for investment programmes by generation, transmission and distribution companies;
(c) prescribe and enforce performance standards for generation, transmission and distribution companies;
(d) establish a uniform system of accounts by generation, transmission and distribution companies;
(e) prescribes fees, including fees for grant of licenses and renewal thereof;
(f) prescribe fines for contravention of the provisions of this Act; and
(g) perform any other functions which is incidental or consequential to any of the afore-said functions.
(3) Notwithstanding the provisions of sub-section
(2) and without prejudice to the generality of the power conferred by sub-section (1) N.E.P.R.A. Shall:
(a) determine tariff, rates, charges and other terms and conditions for supply of electric power services by the generation, transmission and distribution companies and recommended to the Federal Government for notification;
(b) review organizational affairs of generation, transmission and distribution companies to avoid any adverse effect on the operation of electric power services and for continuous and efficient supply of such service;
(c) encourage uniform, industry standards and code of conduct for generation, transmission and distribution companies;
(d) tender advice to public sector projects;
(e) submit reports to the Federal Government in respect of activities of generation, transmission and distribution companies and
(f) perform any other function which is incidental or consequential to any of the afore-said functions.
(4) Notwithstanding anything contained in this Act, the Government of a Province may construct power houses and grid stations and lay transmission lines for use within the Province and determine the tariff for distribution of electricity within the Province.
(5) Before approving the tariff or the supply of electric power by generation companies using hydro-electric plaints, N.E.P.R.A. Shall consider the recommendations of the Government of the Province in which such generation facility is located.
(6) In performing its functions under this Act, N.E.P.R.A. Shall as for as practicable, protect the interests of consumers and companies providing electric power services in accordance with guidelines, not inconsistent with the provisions of this Act, laid down by the Federal Government."
13. Distribution Licences are granted under Section 20 of the Act and tariffs are determined in exercise of powers conferred under Section 31 of the Act in the following manner:--- "31. Tariff.-- (1) As soon as may be, but not later than six months from the commencement of this Act, N.E.P.R.A. Shall determine and prescribe procedure and standards for determination, modification or revision of rates, charges and terms and conditions for generation of electric power, transmission, inter-connection, distribution services and power sales to consumers by licensees and until such procedures and standards are prescribed, N.E.P.R.A. Shall determine, modify or revise such rates, charges and terms and conditions in accordance with the directions issued by the Federal Government.
(2) N.E.P.R.A. While determining the standards referred to in sub-section (1) shall:
(a) protect consumers against monopolistic and oligopolistic prices;
(b) keep in view the research, development and capital investment programme costs of licensees;
(c) encourage efficiency in licensees, operations and quality of service;
(d) encourage economic efficiency in the electric power industry;
(e) keep in view the economic and social policy objectives of the Federal Government; and
(f) determine tariffs so as to eliminate exploitation and minimize economic distortions.
(3) The Procedures established under sub-section (1) shall include:---
(a) time frame for decisions by N.E.P.R.A. on tariff applications;
(b) opportunity for customers and other interested parties to participate meaningfully in the tariff approval process; and
(c) protection for refund, if any, to customers while tariff decisions are pending;
14. The power to make rules is conferred under section 46 of the Act and the powers for making regulations conferred under Section 47 of the Act.
15. Perusal of Section 31 of the Act reveals that. .E.P.R.A. Is enjoined to determine and prescribe the procedure and standard for determination of tariff and in insurance of the said Section and in exercise of powers conferred under Section 46 of the Act, N.E.P.R.A. Tariff standard and Procedure Rules were framed on 23.12.1998. The procedure as set forth in Part it of the Rules i.e. Rule 3 of Rule 16 while standard and guidelines are set forth in Part Il of the Rules i.e. Rules 17 to 27.
16. Rule 3 of the of the N.E.P.R.A. Rules provides or the filing of petitions including tariff petitions and lays own the requirement thereof and the mode of such filing.
17. Rule 4 of the Act perceives of admission of a petition , while Rule 5 refers to publication and service of notices. Rule 6 deals with intervention application to be filed by any person to assist and participate in the proceedings. Rule 6, sub-rule (3) perceives of/ power for N.E.P.R.A. To rant leave to an intervener. Rule 7 relates to reply and rejoinder. Rule 8 pertains to participation by a person other an an intervener. Hearing by N.E.P.R.A. Is catered for under Rule 9, while Rule 10 pertains to discovery and offers power on N.E.P.R.A. To seek discovery of documents or other material relevant to the proceedings. Rule 11 pertains to the power of N.E.P.R.A. To order interrogatories. Rule 12 pertains to rulings that may be passed by N.E.P.R.A. And Rule 14 relates to tentative opinion and the mode thereof to be formulated by N.E.P.R.A. Recording of evidence is dealt with under Rule 15. The decisions of N.E.P.R.A. Are catered for in Rule 16, sub-rules ), (2) and (6) thereof, which reads as under:---
16. Decisions, etc. By N.E.P.R.A. All orders, determinations and decisions of N.E.P.R.A. Shall be taken in writing. iii. N.E.P.R.A. Shall decide a petition within six months of the date of filing of the petition, provided that, N.E.P.R.A. May, only for causes beyond its control including without limitation, the failure by any person to comply with the provisions of these rules or the orders and directions of N.E.P.R.A., extend the aforesaid six months period by a further period of one month, provided further that, N.E.P.R.A.
Shall not extend the time for its final determination in a proceeding beyond an aggregate period of six months. The reasons for such extension in time shall be recorded in writing.
(6) Within ten days of service of a final order, determination or decision of N.EP.R.A., party may file a motion for leave for review by the full strength of NEPRA of such final order, determination or decision, as the case be.
18. The standard and guidelines are given in Rule 17 sub-rules (1) and (3) thereof are relevant for adjudication of the /is at hand and reproduced as under:-
(1) N.E.P.R.A. May, form time to time, set and issue standards and guidelines regarding the substances of contents of filing to provide assistance to persons seeking to file petition and communications. N.E.P.R.A. May hold public hearings in accordance with these rules in the development of standards and guidelines. The persons filing the petitions and communications shall comply with any and all standards or guidelines issued by N.E.P.R.A.
(3) Tariffs shall be determined, modified or revised on the basis of and in accordance with the following standards, namely:-
(i) tariffs should allow licensees the recovery of any and all costs prudently incurred to meet the demonstrated needs of their customers, provided that, .Assessments of licensees, prudence may not be required where tariffs are set on other than cost-of-services basis, such as formula-based tariffs that are designed to be in place for more than one years;
(ii) Tariffs should generally be calculated by including a depreciation charge and a Rate of Return on the capital investment of each licensees commensurate to that earned by other investments of comparable risk;
(b) Tariffs should allow licensees a Rate of Return which promotes continued reasonable investment in equipments and facilities for improved and efficient service;
(c) Tariffs should include a mechanism to allow licensees a benefits from, and penalties for failure to achieve the efficiencies in the cost of providing the service and the quality of service;
(d) Tariffs should reflect marginal cost principles to the extent feasible, keeping in view the financial stability of the sector;
(e) N.E.P.R.A. Shall have a preference for competition rather than regulations and shall adopt policies and establish tariffs towards that end;
(f) The Tariff regime should clearly identify inter-class and inter-region subsides and shall provide such subsidies transparently if found essential, with a view to minimizing if not eliminating them, keeping in view the need for an, adequate transition period;
(g) Tariffs may be set below the level of cost providing the service to consumers of electric power, below the consumption levels determined for the purpose from time to time by N.E.P.R.A., as long as such tariffs are financially sustainable;
(h) Tariffs should, to the extent feasible reflect the full cost of service to consumer groups with similar service requirements; (0 Tariffs should take into account Government subsidies or the need for adjustment to finance rural electrification in accordance with the policies of the Government;
(j) The application of the tariffs should allow reasonable 'transition periods for the adjustments of tariff to meet the standards and other requirements pursuant to the Act, including the performance standards, industry standards and the uniform codes of conduct;
(k) Tariffs should seek to provide stability and predictability for customers; and
(I) Tariffs should be comprehensible, free of misinterpretation and shall state explicitly each component thereof.
19. Tariff is defined in Rule 2(m) in the following manner:--- "Tariff" means the rates, charges, terms and conditions for generation of electric power, transmission, interconnection, distribution, services and sales of electric power to consumers by a licensee."
20. The overview of the provision of the Act and the Rules framed thereunder, referred to above, reveal that N.E.P.R.A. Is vested with the power to determine the tariff, and in doing so, it is enjoined by law to as far as practicable. To protect the interest of the consumers and the companies providing service. More particularly N.E.P.R.A. While determining the tariff must protect the consumer against monopolistic and oligarical practices, encourage efficiency in the operation and quality of service and promote economic efficiency in the power industry. N.E.P.R.A. Must keep in view the economic and social policy objectives of the Federal Government, and more importantly, eliminate exploitation and economic distortions. Furthermore, the tariffs should allow licensees (in the instant case D.I.S.C.Os.) recovery of any and all the costs prudently incurred. The tarrif should also 'provide for a Rate of Return to the licencee of the capital investment which is commensurate to the Rate of Return earned by the other investment of comparable risks and promote investment.
The tariff should also include a mechanism to allow licencee ,benefits through improved efficiency and to improve the quality of service. Financial stability in the power sector should also be taken into account. Competition should be encouraged. Interclass and inter region subsidies should be provided transparently, consumer with low consumption levels i.e., the lifeline consumer being provided with electricity at a below rate and appropriate arrangement for rural electrification should be built into the tariff. Discrimination inter se the consumer groups with similarly service requirements should be avoided. And most importantly, each tariff determination should be comprehensive and free of the possibility of misinterpretation and state explicitly each component thereof.
21. In order to adjudicate upon the /is at hand, it appears to be necessary that the nature of the jurisdiction exercised by N.E.P.R.A. While determining the tariff be identified alongwith the procedure required to be followed by it. One of the primary function of N.E.P.R.A. Is to determine the tariff as is evident from Section 7 sub-section 3(a) of the Act. In order to do so, it is required to follow the procedure as laid down in the Rules of 1998, referred to above. A common refrain both in the Act and the Rules is the protection of the consumer. It has also been noticed that the purposes of the Act and the Rules and the powers conferred upon N.E.P.R.A. While determining tariff is for the purpose of arriving at a Lust and informed decision (as is evident from Rule 9, sub-rule (1) and Rule 10 of the said Rules). The nature of powers conferred on N.E.P.R.A. Are not unfamiliar, as similar powers are also available to Courts of civil jurisdiction under Civil Procedure Code. However the tenor of the language employed discloses a significant difference. While under the Rules such powers are vested in and are to be exercised on the initiative of N.E.P.R.A. On the other hand, under the Civil Procedure Code, powers are to be exercised at the behest of a party. In Rule 10 of the Rules, it is states that N.E.P.R.A. May require any person to produce any documentary or ether evidence in order to arrive at a just and informed decision. Similarly, under Rule 11, N.E.P.R.A: is empowered to administer written interrogatories on any person. In comparison under Order 11, Rule 1, C.P.C., the plaintiff or defendant by leave of the Court may deliver interrogatories. Order 11, Rule 2, C.P.C.
Perceives of an application for leave to deliver C.L.R. interrogatories. Similarly, under Order 11, Rule 12, C.P.C., any party may apply to the Court for seeking an under directing the other party to produce a document. The difference of the initiative is obvious i.e., the N.E.P.R.A. Under the Rules in contra distinction to such initiative being with the party in proceedings under C.P.C. This distinction coupled with the specific direction of the law, whereby N.E.P.R.A. Is enjoined to determine the tariff in a just and informed manner would make it clear and obvious that the nature of jurisdiction being exercised by N.E.P.R.A. Is primarily inquisitorial in nature rather than adversorial. The proceedings conducted by N.E.P.R.A. While determining a tariff is a due fulfilment of an obligation cast upon it by law, rather than a dispute resolution through adversarial proceedings, as is the primary function of a Civil Court. No doubt, there are provisions in the Rules for an intervener and participation of persons other than such intervener, but the same do not detract from the fact that jurisdiction being exercised is inquisitorial in nature. Said provision viewed in the above context are for the protection of the consumer who may intervene and further to ensure transparency in the entire exercise. Thus, the absence of an intervener or any act or omission thereof would not absolve N.E.P.R.A., of its duty to arrive at a just and informed decision while determining a tariff.
22. The fact that the proceedings conducted by N.E.P.R.A. Are inquisitorial in nature does not in any manner detract from the right of the intervener to have his objections adjudicated upon by invoking the various provisions vested in N.E.P.R.A., referred to above. In fact, the N.E.P.R.A. Should not hesitate to exercise such powers at the behest of the Intervener if so required so as to make the participation thereof meaningful in the tariff approval process as is enjoined by Section 31(3)(b) of the Act. Any failure in this behalf would reduce the proceedings before N.E.P.R.A. a sham and denude of its validity.
23. Learned counsel for the petitioners have laid great stress on the fact that any Court, Tribunal or Authority whether Judicial or Quasi-Judicial must exercise its jurisdiction fairly, justly and not whimsically. And pass a speaking order disclosing cogent reasons and such order should not be based on extraneous consideration. Any order not meeting the above standard is subject to judicial review by this Court. In this behalf a large number of judgments of the Honourable Supreme Court as well as this Court have been cited at the bar and referred to above. Attention of this Court was also drawn to Section 24-A of the General Clauses Act. In this behalf suffice it to say that firstly the contentions raised by the learned counsel for the petitioners are in conformity with the settled law and not disputed by the learned counsel for the respondents who have not pleaded a departure from the afore-said settled principle with regard to the exercise of jurisdiction by N.E.P.R.A. While determining the tariff. In fact, it is the case of the respondents that detailed determination discloses sufficient reasons. Thus the real matter in controversy inter se the parties in this behalf is whether the reasons disclosed Pare sufficient and cogent and not extraneous to the Act and the Rules framed thereunder. And furthermore, that all the standards and guidelines required to be considered and followed have in fact been so considered, followed and factored into the impugned decisions.
24. By means of the captioned writ petitions, challenge thrown is two-fold. On the one hand it is contended that due process has not been observed while arriving at the impugned determinations and on the other hand, the requisite/prescribed standards and guidelines enjoined by law in this behalf have not been followed or complied with. It is the case of the petitioners that the aforesaid failure/lapse denudes the impugned determinations of all legality and validity to the extent that the same are without jurisdiction.
25. Before proceeding further it would be appropriate to determine the contours of the lis before this Court. The Act of 1997 inter alia perceives of the grant of licence for (A) Generation, (B)
Transmission and (C) Distribution as is obvious from Section 2(xvi) and Section 7(2)(a) of the Act.
Tariff and other charges are determined alongwith other terms and conditions in respect of supply of electric power services- by a Generation Companies, Transmission Companies and Distribution Companies, as a apparent from Section 7(3)(a). Thus various Generation Companies generate the electricity and supply the same to the National Transmission and Distribution Companies (N.T.D.C.)/Central Power Purchase Agency (C.P.P.A.). The price at which such supply is made to N.T.D.C./C.P.P.A. Is in accordance with the tariff as determined by N.E.P.R.A. The Generation Companies variously generate the electricity from oil, gas while the other sources of power are hydel and nuclear. And obviously the cost varies on the basis of the input employed for generation including the international oil price etc. The proportion of the electricity power made available to N.T.D.C./C.P.P.A. Through the various sources of power varies on seasonal basis on account of obvious fluctuation in hydel power. The C.P.P.A. Arise at a cost per unit of electricity (CPU) by dividing the total amount paid to the producers, of power company by total units purchased.
Whereafter, the N.T.D.C./C.P.P.A. Adds its System Usage Charge (S.U.C.) for supplying the electric power to individual Distribution Companies (D.I.S.C.Os.) as determined by N.E.P.R.A: Thereafter, each distribution company is entitled to add to the cost of electricity incurred by it the amount it is entitled to under the law for providing electric power to individual consumers. Thus the amount payable to D.I.S.C.Os. Is identified as Distribution Margin. Thus the tariff determined in respect. Of individual D.I.S.C.Os. With reference to specific class of consumers consists of the following components:--- The amount paid by N.T.D.C./C.P.P.A. To the producers of power including the generation companies plus (SUC) service usage charges payable to N.T.D.C./C.P.P.A. And the Distribution Margin and other charges allowed to the individual D.I.S.C.Os. It is only the latter which is the real subject-matter of the determination of tariff of the individual D.I.S.C.Os. Thus the /is before this Court is limited to the Distribution Margin and other charges for which individual D.I.S.C.Os. Have been held to be entitled to by virtue of the determination by N.E.P.R.A. The determinations with reference to tariff charges payable to generation companies and the service usage charges to N.T.D.C./C.P.P.A. Are not the subject-matter of these writ petitions as the determination in respect thereof would have been conducted separately through other proceedings which have not been challenged nor any generation company or any other producer of power or the N.T.D.C./C.P.P.A.
Have been arrayed as a party before this Court.
26. In view of above, it would be necessary to examine each determination separately so as to discover whether the mandatory procedural requirements have been followed and the standards and guidelines prescribed by law complied with.
LESCO:
27. Lahore Electric Supply Company (L.E.S.C.O.) which is a distribution company and a licencee filed a petition for determination of tariff in terms of Rule 3 of the Tariff Standard & Procedures Rules, 1998 before N.E.P.R.A. For financial year 2008-2009. Said petition dated 16.6.2008 was received by N.E.P.R.A. On 18.6.2008 and was admitted for hearing on 24.6.2008. Notices were published in the Press on 27.6.2008. All Pakistan Textile Mills Association (A.P.T.M.A.) entered the fray by filing an intervention in terms of Rule 6 of the said Rules. Apparently, hearing was conducted on 11.7.2008 whereafter, "Short Order" by N.E.P.R.A. Determining the Distribution Margin and the tariff of L.E.S.C.O. Was passed on 29.9.2008 which has been assailed before this Court. However, detailed order was released/passed by N.E.P.R.A. On 7.11.2008, and eventually, a notification was issued by the Government of the Pakistan on 12.11.2008. Incidentally, one of the petitioners before this Court is A.P.T.M.A. Who had filed the Intervention.
28. Perusal of the Act and the Rules framed thereunder applicable to N.E.P.R.A. Circumscribing its jurisdiction and the modus of exercise thereof reveals that there is no specific power to pass a "Short Order", nor can such authority or jurisdiction be inferred from any provision thereof by any stretch of the imagination. It is a settled law that the, power to pass a "Short Order" is the sole and exclusive prerogative of the Superior Courts of Pakistan, which power cannot be exercised by any Courts, Tribunal or Authority. All other Courts and Tribunals are required to record the reasons, sign the order and then announce the same. And that any such "Short Order" would not only be invalid, illegal but also without jurisdiction. This Court is fortified in this view by the judgments reported as 2007 MLD 157 Messrs Popular Boards Pvt. Ltd. v. Custom, Excise and Sales Tax Appellate Tribunal and others. Thus, the "Short Order" of N.E.P.R.A. Dated 29.9.2008 is not only illegal and without jurisdiction but also rather pretentious. Said "Short Order" even otherwise is not sustainable in law as it is devoid of any reasoning whatsoever. It is in clear violation of the mandatory requirement of Section 24-A of the General Clauses. Act and the law laid down by the Superior Courts of Pakistan, referred to herein above.
29. The subsequent, detailed reasoning has been released/passed on 7.11.2008 by N.E.P.R.A. The same is also on the record. This Court in all propriety and to do the complete justice between the parties finds itself constrained to examine the same in the light of and upon the touchstone already identified herein above.
30. The factum of the Intervener is mentioned in Paragraph 3 of the said detailed reasons and in Sub-Para thereof, the contentions of the Intervener have been set forth. However, in the subsequent paragraph, a clear and decipherable adjudication of the said contentions is not available.
31. Paragraph 4 pertains to issue and is captioned as such. It is stated that the issues mentioned therein were considered. However, it is not clear whether the issues were framed or not, and in the eventuality that the issues were not framed, no reasons therefor are disclosed. It has also been noticed that, neither L.E.S.C.O. Nor the Intervener were required or allowed to produce evidence. The entire hearing was apparently concluded in one day. The materials relied upon L.E.S.C.O. Including un-audited accounts have been accepted as the gospel truth without any verification. It has further been noticed that about 80% of the Distribution Margin claimed consisted of Operation and Management Costs (O&M Cost) as is apparent from paragraph 6 of the detailed order. The sole basis for determination of the O&M Cost appears to be the increase from the previous financial year's cost, and the price index issued by the concerned department. Individual items consisting of O&M Cost have not been considered or even identified. More importantly, the licencee in view of Rules 17, 3 sub-rule (1) of the Tariff Standards and Procedure Rules, 1998 is entitled only to the recovery of cost prudently incurred. There is no finding that any item of cost has been prudently incurred by L.E.S.C.O. In fact, the decision appears to have been arrived at without even being aware of the afore-said Rule.
32. With reference to Depreciation and Rate of Return, the provision of Rules 17, 3(ii) have been totally ignored, which enjoined that for determining the Depreciation and the Rate of Return, investment of comparable risks, have to be taken into account. Perusal of the order reveals that this exercise has not been undertaken. It appears that N.E.P.R.A. Was not even aware of the provisions of the said rules.
Similarly, the line losses have been permitted and allowed whimsically for purposes of determining the Distribution Margin without any logical explanation whatsoever. No serious heed appears to have been paid to the requirement of law to encourage efficiency.
33. The aforesaid must necessarily be examined in the context of the fact that the D.I.S.C.O.
Concerned is for all intents & purposes a monopoly for the supply of the electricity, which is a public utility and N.E.P.R.A. Is a regulatory authority constituted in this behalf with the primary purpose of protecting the interest of the consumers through proactive inquisitorial procedures prescribed by law in order to lead to a just and informed decision by implementing the standards and guidelines set forth in great detail in law. In the instant case, N.E.P.R.A. Has acted as an unquestioning passive recipient of unverified and selective information on the basis whereof it has mechanically churned out a tariff determination without reference to the purposes required to be kept in view and set forth in Section 31(b) of the Act. In fact, no endeavours appear to have been made in this behalf.
34. In view of above, it is difficult to hold that due process was followed or that the participation of the Intervener in the tariff determination process was meaningful. Both the "Short Order" and the subsequent detailed determination are deficient in cogent reasons based on extraneous consideration, and more importantly, mandatory standards and guidelines have been ignored and not followed or implemented. Hence, the said determination of tariff is not sustainable in law.
GEPCO:
35. Gujranwala Electric Supply Company Ltd. a distribution company also filed a petition for the determination of its tariff on 2.6.2008 for the financial year 2008-2009, which was admitted for hearing on 9.6.2008. Notices were published in the national newspapers on 11.6.2008. There were no Intervener. However, Federation of Pakistan Chamber of -Commerce & Industry (FPCCI) participated as a Commentator in terms of, Rule 8 Hearing took place on -26.6.2008 and the "Short Order" was issued by N.E.P.R.A. On 23.6.2008 to determine the tariff and detailed reasons were issued on 9.9.2008.
36. In the case of G.E.P.C.O., yet again "Short Order" was issued, which as stated above, is neither envisaged by the Act nor the Rule nor otherwise permitted by law, therefore, the same was invalid, illegal and without jurisdiction, as was in the case of L.E.S.C.O. A detailed order having been released has also been scrutinized with the help of the learned counsels for the parties, and appears to be no different in its obvious legal infirmities as was the situation with reference to L.E.S.C.O. Issues were considered, but it is not clear whether they were framed. No evidence was recorded and the reasons for not framing the issues or not requiring the evidence to be produced is yet again conspicuous by its absence. In the instant case too, a substantial part of the Distribution Margin is the O&M Cost but again the same have primarily been allowed on the basis of previous year's expenditure. Yet again there was no finding whether any costs have been prudently incurred. Similarly, the line losses have been whimsically allowed and without any rational reasoning as in the case of L.E.S.C.O.
37. With regard to Depreciation and Rate of Return, yet again the Depreciation and Rate of Return of investment of comparable risks have not been considered or taken into account. No doubt some claims of the licencee have been disallowed, which have been stressed upon by the learned counsel for the respondent, yet there can be no escape from the fact that the impugned determination/order has been passed without any reference or taking into consideration the purpose of the entire exercise.
Requirement of procedure has not been complied with and the standard and guidelines required to be taken into consideration under the law have been ignored. It appears than N.E.P.R.A. Was not even aware of such requirements and dictates of law. In the above circumstances, the Short Order and the detailed order are not sustainable in law.
MEPCO:
38. Multan Electric Supply Ltd. Company filed petition for determination of its tariff for the financial year 2008-2009 on 2.6.2008 which was admitted for regular hearing on 10.6.2008. Notices were issued on 13.6.2008. However, Federation of Pakistan Chamber of Commerce Industry joined the proceedings as a Commentator in terms of Rule 8. There were several Interveners including Multan Chamber of Commerce and individual Textile Mills and A. P.T. M.A.
39. In the instant case yet again, "Short Order" was passed which as has been held in the preceding paragraphs in the case of L.E.S.C.O. And G.E.P.C.O. To be invalid and for the same reason, it too is held to be invalid, illegal and without jurisdiction. Yet again issues are referred to, but no explanation is being offered, whether the same were framed or not. None of the parties was allowed or permitted to lead evidence. No reasons for not allowing the production of evidence by the parties is coming forth or available on record. A substantial portion of the Distribution Margin is the O&M Costs which have been allowed without reference to the mandatory provision which permits allowing only said costs which have been prudently incurred. Yet again said mandatory requirement of law has not been complied with and the order passed and the determination made in oblivion thereof. Similarly in the instant case also Depreciation and Rate of Return have been allowed without reference to investment of comparable risks, which is in violation of law, as narrated ibid. Hence, in the facts and circumstances of the case, the "Short. Order" and detailed order of the determination in the case of M.E.P.C.O. Is held to be invalid, illegal and without jurisdiction and not sustainable in law.
FESCO:
40. In the case of F.E.S.C.O, the matter in issue is slightly different. Application for determining of tariff was filed on 30.5.2005 which was duly advertised and the hearing concluded on 6.7.2005 and the determination made on 23.2.2007. Such determination perceived periodic annual and bi- annual adjustment. Apparently, at various points of time only the bi-annual adjustments were made through determination by N.E.P.R.A. However, they were never notified by the Government of Pakistan. Eventually on 23.8.2008 and in purported exercise of powers under Rule 3, N.E.P.R.A. Took suo motu action for determining periodic adjustment, which was made on 23.8.2008. However, no notice was issued in the press, as a consequence whereof, the entire determination was made at the back of the consumers. The sole issue with reference to the determination through adjustment in the case of F.E.S.C.0: is whether it was necessary to give any opportunity to the consumer to participate in the proceedings as an Intervener or Commentator. It is the case of the respondent that since the original tariff determination stood concluded and had attained finality, and no fresh determination was required or made, only the figures varied on the basis of change in the circumstances in accordance with the formula already determined. In the above circumstances, it is the case of the respondent that the provision requiring publication of notices were not attracted.
41. Whereas, on the other hand, it is the case of the petitioners that as the final outcome of the adjustment would impact obviously the tariff, which the petitioners and other consumers would be required to pay, therefore, they had a right of hearing.
42. There can be no escape from the fact that tariff determination had taken place earlier and had attained C. L. R. finality. However, there can also be no escape from the fact that any adjustment would effect the rights of the consumers. Even if the provisions for publication of notice, intervention or participation of commentator, were not directly applicable, yet the principle of natural justice must necessarily be read in every statute, and no order could be passed without affording opportunity of hearing to the persons likely to be effected. Thus in the instant case when suo motu proceedings were initiated, the consumers had a right of hearing of which they have been deprived, and consequently the determination through adjustment in the case is without jurisdiction.
43. It would have been appropriate for N.E.P.R.A. To have permitted the consumers to have resort to intervention or otherwise participate in the proceedings. Of course, scope of the hearing would be limited to examine and test the veracity and accuracy of the change in the components of the formula already determined without permitting the interveners, if any, to reopen the matters settled through the previous final determination, whereunder, the adjustment was being effected.
In this view of the matter, determination through adjustment dated 23.8.2008 being violative of the principle of natural justice is without jurisdiction and is liable to be set aside.
44. The law i.e., Section 31(4) of the Act, 1997 perceives that after the determination or the periodic adjustment by N.E.P.R.A., the same is made available to the Government of Pakistan, which may issue notification of the tariff. Government of Pakistan is not bound to issue tariff exactly in accordance with the determination or adjustment of N.E.P.R.A., nor in fact in the instant case has done so. In fact, the Government of Pakistan is currently giving subsidy from its own resources, as a consequence whereof, the tariff is notified is lower than the tariff as determined by N.E.P.R.A. This is true in the case of all the four D.I.S.C.Os., in respect whereof, these Constitutional Petitions have been filed. It has also been noticed that the Distribution Margin and other charges allowed and determined by N.E.P.R.A. In the cases of L.E.S.C.O., G.E.P.C.O. And M.E.P.C.O. Is considerably less than the subsidy per unit, currently being given by the Government of Pakistan. Similarly, the effect of the bi-annual adjustment consequent upon suo motu action of N.E.P.R.A. In the case of F.E.S.C.O. Is also less than the subsidy of the Government of Pakistan. The afore-said is obvious from the comparison of the Distribution Margin allowed by N.E.P.R.A. And by quantification of the subsidy being granted by the Government of Pakistan, more particularly, with reference to B-3 tariff being paid by petitioner(s) and subject-matter of the Instant challenge. In this behalf the following facts and figures further elucidate the matter:--- DISCO Distribution Margin as per Impugned DeterminationB-3 Tariff as per Impugned Determination by N.E.P .R.A.B-3 Tariff as per Impugned Notification Peak hoursOff Peak HoursPeak hours Off Peak Hours LESCO Rs.0.65 Rs. 1 1.90 Rs. 6.40 Rs. 8.28 Rs. 4.73 GEPCO Rs. 0.78 Rs. 1 1.90 Rs. 5.90 Rs. 8.28 Rs. 4.73 MEPCO Rs. 0.82 Rs. 1 1.90 Rs. 6.65 Rs. 8.28 Rs. 4.73
45. In the case of F.E.S.C.O., the bi-annual adjustment allowed by N.E.P.R.A. Through the impugned suo motu order has in fact not been given effect to as a consequence of the subsidy being allowed by the Government of Pakistan through the notification determining tariff. However, it must be kept in mind that the formula for such adjustment, forms part of the unchallenged tariff determination and that the bi-annual adjustment was necessitated by a spike in the international oil prices at the relevant point of time.
46. If is in the above perspective that the challenge to the notification issued by the Government of Pakistan after the determinations and of bi-annual adjustment by N.E.F.R.A. Must necessarily be examined. It is not the case of the petitioners that D.I.S.C.Os. Are not allowed any Distribution Margin, whatsoever. Such an argument would be absurd. D.LS.C.Os. Are entitled to all costs prudently incurred. Similarly, it is not the case of the petitioners that biannual adjustment to F.E.S.C.O. In accordance with the formula is not permitted by law. It is the process of determination absence of transparency and the quantum of such bi-annuat adjustment, which is disputed. Thus, in the above circumstances, the disputed Distribution Margin and other charges and the bi-annual adjustment considerably less than the subsidy currently being given by the Government of Pakistan as reflected in the impugned notifications issued in this behalf, in terms whereof, payments are being made by the petitioner and other consumers. In the above circumstances, it is clear and obvious that the amount per unit i.e., the Distribution Margin being disputed by the petitioner(s) is not being actually paid by the petitioners in view of the subsidy being allowed by the Government of Pakistan. However, the exercise of adjudicating upon the legality of the determination and adjustment was necessary as the subsidy given is in the process of being withdrawn.
47. It may be pertinent to mention that if said notifications are set aside, the respondents-DISCOs will end up receiving less money from 'the consumers, than the amount they are required to pay to N.T D.C./C.P.P.A. Resulting in huge financial costs leading to an economic collapse of the distribution system. This Court cannot be oblivious of this particular aspect of the matter.
48. The upshot of the above discussion is that in the case of L.E.S.C.O. The short order dated 29.9.2008 and the detailed determination dated 7.11.2008, and in the case of G.E.P.C.O. The short order dated 23.8.2008 and the detailed determination dated 9.9.2008 and in the case of M.E.P.C.O.
Short order dated 23.8.2008 an the detailed determination dated 26.9.2008 are hereby set side, with the result that the tariff petitions shall be deemed to be pending before N.E.P.R.A., which shall decide those petitions afresh in accordance with law. Similarly, suo motu determination of bi - annual adjustment dated 23.8.2008 in the case of F.E.S.C.O. Is also set aside with the consequence that suo motu proceedings shall be deemed pending before N.E.P.R.A. To be decided afresh in accordance with law by it after publication of due notice in press and permitting the Interveners and the Commentators, if any, to participate therein. However, all the notifications issued by the Government of Pakistan being impugned by means of captioned writ petitions are held to be valid and legal.
Petition disposed of in terms enumerated ibid. .