Nepra Member Flags Financial Inconsistencies in National Grid's Rs332 Billion Revenue Approval

Amina Ahmed, a member of the National Electric Power Regulatory Authority (Nepra), has raised concerns regarding significant regulatory and accounting inconsistencies in the National Grid Company's (NGC) recently approved revenue requirement of Rs332 billion. In a detailed dissenting note, Ahmed highlighted what she termed a 'mirror image' issue concerning receivables and non-transferred assets, challenging a 2-1 majority decision that approved the combined revenue for fiscal years 2022-23, 2023-24, and 2024-25. The NGC, formerly NTDC, had initially requested Rs478 billion over the three-year period, seeking substantial increases in its revenue requirement each year. Nepra's majority ruling, however, allowed a total of Rs332 billion, with specific amounts allocated for each fiscal year and corresponding use-of-system charges (UoSC) approved for consumers. Ahmed specifically contested the treatment of over Rs19 billion owed to the Central Power Purchasing Agency (CPPA), which was classified as a current liability and subsequently treated as a loan to reduce NGC's equity. She explained that this amount arose from a business transfer agreement in 2015 where NGC transferred assets and liabilities to CPPA, resulting in a net payable due to the liabilities exceeding the assets transferred. Correspondingly, NGC holds an offsetting receivable from other power sector entities, representing assets not transferred. Ahmed argued that this receivable is essentially the counterpart to the CPPA liability and that recognizing one without the other distorts the calculation of NGC's equity and permissible return. She contended that Nepra's methodology for calculating equity, which involves deducting liabilities from assets, should either net off these corresponding items or exclude both to avoid a distorted financial picture.