The National Electric Power Regulatory Authority (NEPRA) has sounded a major alarm over the procurement of advanced metering infrastructure, commonly known as smart meters, by the country's power distribution companies (DISCOs). The regulator has identified potential irregularities amounting to a staggering Rs. 30 billion, raising serious questions about the transparency and financial prudence of the entire process.
Regulatory Scrutiny Uncovers Major Flaws
In a detailed observation sent to the Power Division, NEPRA has pointed out significant deviations from established rules in the smart meter procurement plans of several DISCOs. The core of the issue lies in the single-stage, two-envelope bidding process adopted by the companies. NEPRA contends that this method is inappropriate for such a large-scale, technologically complex procurement, potentially favoring certain vendors and stifling fair competition.
The regulator emphasized that the sheer scale of the project—involving millions of meters—demands a more rigorous and transparent two-stage bidding process. This standard procedure is designed to first evaluate the technical capabilities of bidders before opening their financial proposals, ensuring that only qualified contenders are considered for the massive financial outlay.
Financial Implications and Contract Concerns
NEPRA's analysis suggests that the current procurement approach could lead to a massive financial loss for the national exchequer. The authority estimates that the DISCOs' chosen method may result in an overpayment of approximately Rs. 15,000 per meter. When multiplied across the vast number of units planned for installation, this per-unit overcharge balloons into the Rs. 30 billion figure that has triggered the regulatory red flag.
Furthermore, NEPRA has raised objections to the proposed contract duration of ten years for these projects. The regulator argues that such a long-term commitment is unreasonable, especially given the rapid pace of technological evolution in the metering sector. A shorter contract period would allow for more frequent reviews and better adaptation to new, cost-effective technologies as they emerge in the market.
Demand for Investigation and Path Forward
In light of these findings, NEPRA has formally requested the Power Division to conduct a thorough investigation into the procurement plans and the identified irregularities. The authority has made it clear that it cannot approve the investment plans of the DISCOs until these fundamental issues are addressed and resolved satisfactorily.
The smart meter initiative is a cornerstone of efforts to reduce electricity theft and improve the financial viability of the power sector through accurate billing and reduced line losses. However, this controversy casts a long shadow over its implementation. NEPRA's intervention underscores the critical need for strict adherence to procurement laws and transparency in all major public sector projects to safeguard national resources and ensure that public funds are spent judiciously.
The ball is now in the court of the Power Division and the concerned DISCOs to respond to these serious allegations and either justify their procurement strategy or overhaul it to meet regulatory standards and protect the interests of the electricity consumers who will ultimately bear the cost.
