ISLAMABAD: National Electric Power Regulatory Authority (Nepra) is to hold a public hearing on the matter of Authority Proposed Modification (APM) in the distribution licence of KE in Karachi on September 21, 2020 wherein people from different sections will offer comments in this regard. Power sector analysts are of the view that scrapping exclusive rights of KE in Karachi would jeopardise the sale of 66.40 shares of Karachi Electric (KE) to Chinese company M/s Shanghai Electric Power (SEP).
According to Nepra, KE has not expanded/upgraded its distribution network and is not fulfilling its obligations to supply electric power to all consumers in the service territory as per terms and conditions of existing distribution licence. In view of this situation, the consumers of KE are facing the excessive load shedding, safety hazards, excessive billing and other issues.
Further, the Authority has also taken notice that several housing societies, industrial estates, shopping systems in the service territory of KE are further delivering/reselling to their residents / occupants. Nepra argues that such an arrangement between these entities and KE is tantamount to exclusion / surrender of such areas from the service territory of KE. However, KE has termed proposed modification in its distribution licence contrary to Supreme Court order and against public interest, well-informed sources told Business Recorder.
National Electric Power Regulatory Authority (Nepra) has proposed modification in KE's licence and will conduct a public hearing within next few days on this issue.
The power utility points out that the proposed modification is not in the public interest rather it is against the public interest and does not meet the criteria provided under Section 26 of the Nepra Act, 1997 (as amended) and the Nepra Licencing (Application and Modification Procedure) Regulations, 1999. The proposed modification will have an adverse and devastating effect on the performance of the licencee, on the service being provided to consumers and on the costs and tariffs of the licencee.
The federal cabinet will also ratify a decision of the ECC about increase in tariff of KE on Tuesday (today) besides discussing overall electricity situation in the country.
Nepra determines the electricity tariff which is notified by the Power Division on behalf of the Federal Government. In order to resolve and rationalize eleven quarterly adjustments of K-Electric from July 2016 to March 2019, following submissions were made by Power Division for consideration of the ECC of the Cabinet on March 18 2020: "The recommended quarterly adjustment to the tune of Rs.4.87/- being the differential between the schedule of tariff recommended by Nepra for April - June 2019 and schedule of tariff earlier recommended by Nepra and reflected in the KE Notified Tariff, be, notified for each category of consumer, to the extent of bringing K-Electric consumers end tariff at par with what is currently in filed for consumers of XWDISCOs (increase in rate of Rs.1.09 to Rs.2.89/kWh for various categories of consumers).
"Any difference between the two rates be made available by way of subsidy. which shall amount to Rs.26 billion only. To the extent of earlier quarters, KE be intimated to file its revised claim to Nepra for such quarterly adjustments after reflecting subsidy claims already processed pursuant to SRO No.571(I)/16 of June 27, 2016, which has not been accounted for the current determination and incremental rates for such adjustments be sought so that any such revenue requirement is recovered prospectively subject to any further subsidy (if any) as may be made available on uniform basis".
The sources further said that the ECC in its meeting held March 26, 2020 approved the above mentioned recommendations with direction to effect/ implement after three months i.e. after June 26, 2020. Meanwhile, in the wake of recent energy shortfall in K-Electric, the ECC vide decision No.ECC-288/31/2020 directed that the decision already taken in the ECC of March 4, 2020 may be implemented. However, the ECC decision was not ratified by the Cabinet and stands deferred. In the wake of financial implications of subject issue, a special CCoE meeting was held under the chairmanship of the Prime Minister on August 17, 2020, wherein, it was decided to defer the ECC decision till August 31, 2020.
The Federal Cabinet in its meeting held on July 28, 2020, while ratifying decisions of the ECC meeting of July 3, 2020, decided that an awareness campaign on rationale for enhancing the K-Electric's tariffs should be launched for the public and the matter should again be placed before the ECC for deliberations. Accordingly, the awareness campaign for enhancing the K-Electric tariff was launched in all national newspapers of Pakistan on August 20, 2020 and August 25, 2020. It was pointed out that on directions of Prime Minister of Pakistan, Minister for Power Division and Special Assistant to Prime Minister for Power Division visited Karachi on August 09, 2020 to discuss the issues of K-Electric including increase in tariff rates and additional supply for K-Electric in future.
The sources said, power sector was facing financial repercussions in the absence of notification of K-Electric quarterly adjustments. Power Division submitted the following proposal for consideration of the ECC: "If the Consumer End Tariff to be implemented w.e.f September 01, 2020 and for the period of two months i.e. July 1 to August 31, 2020, an estimated amount of Rs.4.7 billion cash shortfall has accrued, as K-Electric is not able to pass increased tariff to its end consumers. In addition, next quarterly adjustments for the FY 2019-20 (July 2019 to June 2020) would also be determined and also be required to pass on, would make it difficult for passing on increased cost to the end consumers. Accordingly, KE may be released Rs.4.7 billion from the existing approved budget of FY 2020-21"; and "As per ECC decision of July 28 2020 issued the ratification of the decision taken by ECC of the Cabinet in its meeting held on July 03, 2020 that an awareness campaign on rationale for enhancing the K-Electric's tariffs should be launched for public and the matter should again be placed before the ECC for deliberations. Since the awareness campaign for enhancing the K-Electric tariff was launched, the Quarterly adjustments of K-Electric for period from July 2016 to March 2019 may be notified with effect from 1st September, 2020."
On September 2, 2020, during the ensuing discussion, the Minister for Railways raised concern over the proposed Quarterly Adjustment of K-Electric and suggested that a "meticulous" approach may be adopted for recovery from already hard hit consumers.
Copyright Business Recorder, 2020
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