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    KE, Discos: Nepra approves negative tariff adjustments

    February 1, 2023 - Business Recorder


      National Electric Power Regulatory Authority (Nepra) on Tuesday approved in principle a negative adjustment of Rs 10.80 per unit for K-Electric (KE) and Rs 2.32 per unit for Discos for December 2022 under monthly Fuel Adjustment Charges (FCA) mechanism, aimed at requests from both KE and CPPA-G for sanctioning of their previous due adjustments already cleared by Regulator's technical teams.

      Both decisions were announced by the Authority separately after two public hearing officiated by Chairman Nepra, Tauseef H Farooqi, Member Sindh Rafique Ahmad Shaikh, Member KP Maqsood Anwar Khan and Member Balochistan, Mathar Niaz Rana. Nepra's Technical Team presented cases of CPPA-G and KE.

      KE had sought negative adjustment of Rs 10.262 per unit to pass on Rs 12.081 billion to the consumers for December 2022; however, the Regulator increased the negative impact to Rs 12.80 per unit after considering reports of financial loss of Rs 9.17 million due to low gas pressure calculated by the EMO Section.

      KE seeks reduction of Rs10.262 per unit in FCA for December

      The Authority also approved in principle negative adjustment of Rs 2.32 per unit for Discos in FCA for December 2022, cumulative impact of which will be Rs 18.7 billion.

      Chief Executive Officer (CEO) CPPA-G Rehan Akhtar requested the Authority to allow its pending adjustments of Rs 18 billion, of which Rs 4.5 billion has already been agreed by the Nepra's audit team. However, a member of audit team challenged the claim of CEO CPPA-G saying that the amount being claimed is incorrect. The Authority gave one month to its team to finalize its recommendations.

      During the hearing, responding to a question regarding demand of IMF for increase in tariff at a time when the Authority is allowing negative adjustments, Chairman Nepra remarked that the Fund is only saying that extend subsidy only on what you have the money for or ability to do and no more.

      Talking about behaviour of IMF team with the officials, Chairman Nepra said that it was not important. 'I'm dealing with them for last 3.5 years. Apparently, they (IMF) look very cruel and as if they are bent on destroying us but in fact they say only one thing which is 'cut your coat according to your cloth'' he said, adding that Pakistan is beset with issues as recovery, loss and performance are questionable, rupee is depreciating, and 65 per cent generation is based on imported fuel. He said that there are challenges but Nepra team will try to convince the Fund to show some leniency and the government is already making efforts to convince the Fund to minimize the rise in tariffs.

      He further stated that the main purpose of the Regulator is to tell the Fund the true cost of electricity and power industry, adding that provision or non-provision of subsidy is the domain Government of Pakistan.

      According to Chairman Nepra, IMF maintains that there should be no subsidy and such is the crux of the discussions held between Fund the GoP. He said talks between Fund and the Regulator are held on the precise cost of electricity and over performance of power industry in a professional way. During the hearing questions were raised on the plans of NTDC regarding evacuation of electricity from Thar-based coal power projects.

      NPCC official stated that presently NTDC can only evacuate up to 1800 MW from Thar projects of 2400-MW. However, efforts are being made to expedite installation of required equipment which will be completed by April 2023.

      Arif Bilwani, Aneel Mumtaz and other consumers raised different questions with respect to KE's affairs.

      One of the consumers raised the question of load shedding despite substantial generation. An official of Nepra stated that the Regulator is starting proceedings against KE for load shedding on the basis of aggregate Commercial and Technical (C and T) losses. Tanveer Barry representative of KCCI welcomed Rs 10.262/ kWh refund to KE consumers but added that due to QTA of Rs 4.4547/ kWh consumers will only benefit by Rs 5.8073/ KWh negative adjustment in the coming months. He feared higher fuel prices and devaluation might make it a positive impact in coming months.

      He further said that peak hour tariff for industry be withdrawn because uninterrupted production in industries was the only way to pull the country out of the existing economic crises. In the month of December KE's own generation was only 28%, fuel cost per unit @ Rs 21.567. It purchased electricity from CPPA-G on 61% @ Rs 7.120/ but there was no cost associated with peak hour and off peak hour rate so why was KE charging peak hour rates to industries.


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