‘Nepra is delaying MLR on cold storage tariff decision'

Business Recorder

04-05-2025

ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) is reportedly sitting on a Motion for Leave for Review (MLR) on its decision regarding tariff for Cold Storages filed by a citizen of Karachi as the decision of Nepra Appellate Tribunal has also put the Regulator in a difficult position in which the latter has been directed to rehear the case.
Arif Bilwani had filed his MLR on December 30, 2024 under Rule 3(2) of the Nepra (Review Procedure) Regulations, 2009 against the decision in the matter of application of tariff category for Cold Storages.
In a recent letter to Registrar Nepra, Bilwani referred to the issue wherein the Authority accepted his MLR after a lapse of eight weeks through a letter of February 13, 2025. However, since then, there has been no update or progress communicated by the Authority.
Classification of cold storage facilities: Nepra faces legal challenges following decision of appellate forum
'It is difficult to comprehend the continued delay in scheduling the hearing, despite more than four months having passed since the acceptance of the MLR. Subsequent to the said decision of the Authority, the Ministry of Industries & Production, the Federal Cabinet, and the ECC have all formally recognised Cold Storages as an industrial activity. The relevant approvals, meeting minutes, and official clarifications were duly submitted to Nepra on March 05, 2025,' said Bilwani in his letter.
He requested the Authority to conduct the hearing on the MLR without any further delay as Cold Storages are incurring significant financial losses due to the imposition of an incorrect Commercial Tariff—stemming from the flawed decision currently under review.
In MLR of December 30, 2024, he referred to the Authority's decision which was made through a casting vote by the Chair, despite dissenting notes from two learned members, including the Member Legal. He added that this approach raises significant concerns about the fairness and rationale of the decision.
In objections to the decision he referred to Section 5(3) of the Nepra's Act regarding compliance with Section 5(3) of the Act which states: 'The member shall have reasonable notice of the time and place of the meeting and the matters on which a decision by the Authority shall be taken in such meeting.'
Arif Bilwani argued that it is unclear whether reasonable notice was served to the Member Tariff, whose input was critical given the nature of this issue. The Member Tariff actively participated in all prior deliberations on this matter over the last two years. His absence from the final meeting raises questions about procedural compliance and the validity of the decision-making process.
He further stated that he had regularly attended Nepra's public hearings, including those held in 2023 for various Discos (PESCO, TESCO, GEPCO, and MEPCO). During these hearings, he had presented detailed arguments distinguishing modern cold storage facilities from traditional ones.
Bilwani argued that modern cold storages, which use controlled temperature and humidity systems, provide critical value-added services to industrial and commercial sectors. These services play a pivotal role in food security, health security, and export facilitation. His recorded views on this subject are available with the Authority in audio/video format.
Bilwani further maintained that the dissenting opinions of the Member Legal and Member Technical align with his arguments. These members articulated well-founded positions based on technical, legal, and global practices. Overruling such expert insights in favour of concerns about circular debt or subsidy implications undermines the integrity of the decision-making process.
He also challenged the understanding of the Authority about the modern Cold Storage industry and its operations, saying that the Authority's reasoning in paragraphs 10–12 of its decision reflects a narrow understanding of value addition. Categorising modern cold storages as merely providing a 'service to grocery chains, food distributors, restaurants, and other retail businesses' disregards their complex and highly technical operations, he said.
Modern cold storage facilities involve significant investments and employ advanced electromechanical processes to: (i) preserve the physical, chemical, and nutritional properties of products; (ii) extend the shelf life of perishable goods through precise temperature and humidity controls; and (iii) support critical industries like pharmaceuticals, where the controlled storage of active ingredients is essential for life-saving drug production.
He said that such facilities are distinctly industrial in nature and contribute significantly to the economy.
According to Bilwani, categorising modern cold storages as commercial consumers will increase electricity costs, disproportionately affecting industries relying on these services. Exporters, in particular, will face higher costs, reducing their competitiveness in both local and international markets. Another major sector which avails this facility is the Pharma sector which manufactures hordes of Pharma products including many life saving and other critical medicines whose active ingredients need specialized storage facilities which the controlled temperature Cold Storage facility provides. As the Pharma sector cannot take risk of any hurdle, shortage or scarcity of these critical active ingredients they always keep them readily available in bulk by availing the aforesaid facility.
Copyright Business Recorder, 2025