ISLAMABAD - The government is facing a very difficult situation after the Lahore High Court declared surcharges worth Rs 100 billion on electricity consumers unconstitutional and illegal.

“It is a tough situation; we are going to the Supreme Court of Pakistan, but if the apex court dismisses our appeal, it will be a problem as the federal budget is to be presented just after two days,” said an official. “It is not only the budget but also we have to get next tranche from IMF by the end of this month. We would try to file a review petition through the attorney general for Pakistan before June 26, the day when the IMF Board will hold a meeting for the release of the next instalment,” the official added.

In case of dismissal of the petition, officials are eyeing Nepra to get some new surcharges or taxes approved silently, in the same way the government recently withdrew subsidies from electricity consumers through the power regulatory authority.

Though Nepra has been allegedly endorsing the government decisions as a rubber stamp, this time the power regulatory authority seems helpless.

“Though we genuinely believe surcharges must be imposed in order to run the operations, we cannot accommodate the government this time,” said one of the officials.

The petitioners in his petition challenged Section 31(5) of the Nepra Act, 1997, stating that the power of the federal government to levy surcharge is ultra vires and negation of the Constitution of Islamic Republic of Pakistan, 1973, as it has been added through the Finance Act, 2008.

This all started when the Ministry of Water and Power in a review petition against tariff determination of Discos for 2014-15, approved by Nepra, argued that the approved tariff was not enough to meet financial requirements of the companies.

The ministry requested Nepra to include equalisation surcharge, debt servicing surcharge, universal obligation fund surcharge and Neelum-Jhelum surcharge in the schedule of tariff.

The Lahore High Court on last Friday directed the federal government to refund or adjust the collected amount under these heads in the upcoming bills. The court ordered Nepra to work out a repayment plan within three months.