KESC tariff cut

The National Electric Power Regulatory Authority (Nepra) on Wednesday reduced the power tariff of Karachi Electric Supply Corporation (KESC) by 8.74 paisa per unit, on average, in its determination under an 'Automatic Tariff Adjustment' (ATA) formula based on furnace oil price.
Translated into practice it will mean reduction of 5 paisa per unit for residential consumers using over 50 units, 12 paisa per unit for commercial and industrial consumers, besides 10 paisa per unit on bulk supply. As against these concessions, reduction for agricultural consumers has been determined a 5 paisa per unit and for lifeline consumers, that is those consuming up to 50 units, it will remain unchanged at Rs 1.40 per unit.
The new dispensation being based on the ATA formula making it obligatory to pass on the price fluctuations in the international fuel market to the consumers, may be variously interpreted.
This has reference to the likely feeling of some relief to the beneficiary consumers and dismay among those left out, particularly the agricultural consumers and those at the lowest rung of domestic consumers.
It is, however, just another matter that, viewing the situation from its typical populist angle, the federal government to which Nepra recommendations have been forwarded for notification in the official gazette, may deem it politic to satisfy those left unhappy by the regulatory body's determination.
It will be recalled that seemingly carried away by a similar populist urge in July last year, when Nepra had determined that KESC needed to increase the price of its electricity by 14 paisa per unit, a high level meeting chaired by the Prime Minister Zafarullah Jamali, cut the increase to seven paisa per unit, ostensibly from fear of a backlash, while deciding to share the remaining seven paisa per unit as government subsidy.
As then pointed out in these columns, while so deciding it ignored the fact that this help would be in addition to the monthly subsidy of nearly one billion rupees KESC had been already receiving from the Federal government.
It will also be noted that the then patronising gesture from the government failed to prove of much avail in so far as the alleviation of the woes of KESC was concerned.
Deep-rooted as have been the causes of disarray at KESC, the government should have better realised the urgency of making the utility as vibrant, efficient and purposeful as the power needs of megalopolis Karachi required.
This, of course, has reference to its being the only separate power utility outside the WAPDA network that serves the rest of the country. Needless to point out, KESC's woes basically originate in its failure to match its generation capacity to the city's demand, and consequently meeting the shortfall through purchases from IPPs and Wapda.
It will also be noted the Federal government's belated urge for a Rs 13.4 billion system improvement plan, envisaging installation of cable wires for transmission, safer relocation of 162000 electricity meters and rehabilitation of the Port Qasim Thermal Power Station, has yet to yield any encouraging result either.
Viewing the overall situation in this perspective, the Federal government would do well to resist any temptation not to enforce Nepra's determination as the present adjustments have taken into account the decrease in the utility's cost of fuel during the last quarter from reduction in the price of furnace oil and use of gas.
It is high time to address the real woes of KESC by reducing its cost of generation and purchases and effectively reducing the line and other losses too.