ISLAMABAD: National Electric Power Regulatory Authority (Nepra) is all set to decide on termination or otherwise of exclusivity of Karachi Electric (KE) at a public hearing scheduled for today.
The Nepra team headed by its chairman Tauseef H Farooqi has already landed in Karachi aimed at hearing the complaints of stakeholders.
According to the agreement, KE has been ensured exclusive electricity distribution rights to Karachi and other adjacent areas till July 2023, while determining operational targets for the company such as sales growth and T&D losses. However, the regulator is extremely dissatisfied with KE for not taking requisite measures to ensure sustainable supply, reliability and its own generation.
The recent power supply issues during historical torrential rains and loss of lives due to electrocution and property exacerbated the problems of power utility when the Supreme Court of Pakistan took serious note of the situation.
Dubai's M/s Abraaj owns 66.40 per cent shares in KE whereas GoP's shares are 24.6 per cent. China's Shanghai Electric Power (SEP) wants to buy 66.40 per cent shares of KE.
The power utility claims that Nepra has initiated proceedings to terminate KE exclusivity whereas the Supreme Court has asked the regulator to complete its determination in accordance with the law.
Power sector experts argue that abrupt and pre-mature action terminating KE exclusivity will lead to serious issues.
Power sector experts, however, are of the view that Nepra's harsh step would not provide a level playing field between the KE and new players as KE is obliged to serve its entire service areas including high loss areas and sell electricity at a regulated tariff. It imposes cross subsidy surcharge on the good consumers notably industrial, bulk and high value residential / commercial consumers.
KE says investments are required for high loss and low income areas to convert them into low loss areas. Target to exempt 93 per cent of Karachi from load shedding would not happen and in fact current exempt areas (75 per cent) would face load shedding. The power utility also claims that it has invested $3.3 billion plus on transmission, distribution network and other related structures.
New players i.e. housing societies- industrial areas etc have no obligations and will avoid high loss, low collection areas and focus on low loss, high collection areas. They will sell electricity at a negotiated tariff specifically for their preferred customers with no cross subsidy or surcharge. They won't have their own network and its corresponding maintenance and investment cost, and therefore, will be freewheeling KE network with KE bearing all the transmission and distribution losses currently running lower than 20 per cent.