Gencos allowed four paisa per unit increase: lifeline, Karachi consumers not included

November 30, 2012

RECORDER REPORT

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The National Electric Power Regulatory Authority (Nepra) on Thursday allowed power generating companies an increase of four paisa per unit in the price of electricity. This increase will, however, not be applicable to lifeline consumers and users in Karachi. Meanwhile, a report compiled by the authority said that the electricity shortage will persist till 2020.

The report stated that under the current scenario, there was no solution to the prevailing power crisis. Thousands of workers had become unemployed because of the prevalent shortfall, the report said. It said KESC''s line losses and power theft accounted for 35 percent losses of the utility. It also said that institutions concerned had been unable to overcome the crisis. Nepra pointed out that the sale and purchase of the utility had gone unchecked.

The report indicated that 40 percent of electricity was lost in line losses and theft. At present 14,000 megawatts are being produced in Pakistan while demand stands at 23,000MW. Meanwhile, the Nepra increased the per unit price of electricity by four paisa. This increase will not be applicable on lifeline consumers and users in Karachi. The authority allowed power distribution companies to collect Rs 1.47 billion on account of line losses and Rs 0.595 billion on account of price differential of furnace oil.

The authority had asked the Central Power Purchase Agency (CPPA) for details on line losses. The Nepra members questioned the authenticity of invoices coming from as many as 13 small power producers and captive power producers selling their electricity to Faisalabad, Multan, Hyderabad and Sukkur power supply companies and asked Nepra officers if they had verified these invoices. When told that the invoices had been accepted as claimed by the CPPA, the Nepra members said that all such invoices should be verified before being approved.

Nepra member Shaukat Ali Kundi observed that it was strange to note the country was facing acute load shortfall but the power companies were paying such amounts to the IPPs without taking full energy. He also objected to the payment of Rs 595 million in bonuses, as efficiency incentive, to two plants and asked if IPPs were also penalised for poor performance.

The CPPA representative confirmed that penalty charges were imposed on IPPs for poor performance. Kundi deplored that efficiency incentives were being paid to IPPs by overburdening consumers. He said he would oppose, in writing, the payment of partial load adjustment charges and bonuses and efficiency incentives to IPPs by charging consumers. He said that his legal advisers had found fault with such payouts, adding that fuel-based tariff adjustment should only be based on the cost of fuel and nothing else. Some Nepra members also questioned utilisation of four loss-making generation companies of Wapda, which were inefficient and producing expensive energy. They said they have been urging the government to improve their efficiency, but in vain.