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ISLAMABAD: National Electric Power Regulatory Authority (Nepra) on Wednesday adjourned hearing on a petition of Karachi Electric (KE) till Thursday (today) regarding increase in its tariff by over Rs 1.50 per unit under mid-term review aimed at hearing the objections of the consumers and other stakeholders.

The public hearing was presided over by Chairman Nepra, Tauseef H. Farooqi whereas Nepra members were also present on this occasion.

Nepra team and KE officials differed on statistics with respect to previous and future investments, provided by the two sides.

KE had sought an increase of Rs 1.54 per unit initially and after certain adjustments it sought a Rs 1.26 per unit increase. The power utility had requested for Rs 144 billion increased capex above Nepra allowed capex of Rs 299 billion. KE incurred Rs 44 billion capex in 2018 and Rs 39 billion in 2019. KE has added 423 MW electricity to the system. KE officials said that investment commitments are honoured except 900 MW power plant and a couple of grid stations which would be ready by 2022 and 2023. However, there are delays in 700 MW power plant due to reasons beyond the power utility's domain.

Nepra officials maintained that objective of the mid-term review was to look into the investment of K-Electric, while in its application there were various things "out of scope".

Chairman Nepra was of the view that K-Electric is claiming wonderful performance, while on the ground the regulator cannot see it. If it had made improvement, then it should also be visible.

Nepra officials claimed that KE has made actual investment of Rs 116.592 billion which was 51.2 per cent against the commitment of Rs 298.915 billion under multi-year tariff.

They further argued that there were "contradictions" in K-electric's claims and reality.

CFO, KE, Aamir Ghaziani said that KE has readied relevant documents which would be shared with the regulator.

Chairman Nepra said that KE should also try to bring improvement in its own organization as all the factors of delay are being shifted to other stakeholders.

"Whatever has been shown in the papers by K Electric is not available on the ground. Nether consumers nor the higher courts or other stakeholders are satisfied with the performance of power utility," said Chairman Nepra.

At this CFO KE said that it is a journey, adding that in some instances external factors including rains, cable wires, hooks and illegal extensions, etc., are involved. He said during rainy days safety was the main concern. KE is investing in those areas and with ABC cable improvement is witnessed. The Authority should visit those areas where ABC cable is installed and enquire from the customers about performance and reliability of service. The Authority would witness considerable improvement.

He further stated presently 70 per cent feeders are loadshedding-free; the number would increase to 99 per cent by 2023 and loadshedding will be limited only to one percent area.

"It would have been easy for us to accept KE's request if improvement was witnessed. We cannot allow a huge amount of investment on the basis of just words," Chairman Nepra said.

CFO KE said that K-Electric wants to continue to increase spending in generation, transmission and distribution.

Chairman Nepra argued that KE invested only Rs 116.5 billion against commitment of Rs 298.9 billion and now is seeking Rs 442 billion.

He was of the view that KE has the capacity to seek investment but does the power utility have the capacity to invest such a huge amount and pass benefit to the consumers?

Nepra's case officer said that in the past KE definitely invested "far less than the commitment". However, there is a need to check whether the power utility has the capacity to invest Rs 442 billion.

KE's CFO said that since 2016, rupee devaluation had led to KE incurring a loss of Rs 58 billion because allowed interest rate is Rs 121 per USD against actual exchange rate of Rs 155 billion, adding that an additional Rs 24 billion additional is on account of investment in interconnection facilities, which was not part of originally approved plan. He added that Rs 43 billion has been spent on improving safety and reliability of electricity infrastructure since the 2018/19 rainfall.

He said that the number of feeders included in Annual Preventive Maintenance has increased from 100 to 300.

Overall efficiency of the generation fleet has improved from 95% to 98% since 2016 while availability has improved from 81% to 91%., he added.

Generation fuelled efficiency benefit of Rs 14 billion has been passed on to the consumers. Tripping on the transmission network has gone down by 56% since 2016. He said that 5,500 PMTs have been added, taking the number to around 28,800 PMTs, while another 3,500 is expected to be added by 2023. Total transmission capacity has increased to 9,916 MVA from 6,300 MVA since 2016.

He said aggregate technical & commercial loss has been reduced from 68% to 25%, adding that 93% of Karachi will be free from load-shed by 2023 compared to 75% now and 6% pre-privatisation.

Ghaziani said that KE has not incorporated additional inventory, adding that in this case working capital will increase which will further increase the tariff.

At this, the Chairman said: "don't give us sermons and just tell us what will be its impact"? Ghaziani responded that KE has already shared the figures with the regulator about level of inventory and its additional cost.

Director General Tariff, Sajid Akram opposed the increase in base tariff, saying that the power utility has taken it out of context. KE requested Nepra not to revise charges on collection of PTV fee and connection charges, adding that in case of revision, its tariff will increase further.

Copyright Business Recorder, 2020