KARACHI: The Chief Executive Officer (CEO) of K-Electric, Moonis Abdullah Alvi, has said the recent hike in KE's tariff of up to Rs2.89 per unit will have no impact on its profitability.
"The government of Pakistan sets the tariff for the Discos: KE has no role in this regard," Alvi said while taking to the Business Recorder. When asked about the overall financial impact of the fresh tariff hike on consumers, the CEO said it would be up to Rs2.50 billion per month.
However, he said the fresh increase would not apply to those of K-Electric's 1.6 million (60 percent) consumers who had single-phase connections and whose monthly power consumption was less than 300 units. He said the SRO issued by the Ministry of Energy brought Karachi's power tariff at par with the rest of the country, and Karachi's power consumers would now pay the same rate for electricity as consumers of other Discos, as per the national uniform tariff policy.
According to the previous SRO 575/2019, consumers in Karachi consuming 301-700 units and above were being charged Rs17.60 and Rs20.70 per unit, whereas the rates of the consumers of the other Discos of the same slab were Rs19.25 and Rs22.35 respectively, creating a difference of Rs1.65 per unit.
Peak time and off-peak time rates for Karachi consumers were Rs20.70 and Rs14.38 per unit respectively whereas other Disco consumers were being charged Rs22.35 and Rs16.03 respectively, again leaving a difference of Rs1.65 per unit.
Furthermore, for the commercial and industrial consumers, the difference between Karachi consumers and other Disco consumers was Rs2.89 per unit. However, according to the new tariff issued through SRO1037, there will be uniform rates in all slabs, all around Pakistan.
He said the Economic Coordination Committee (ECC) had approved an increase of Rs4.88 per kWh to ensure that tariff at consumer's end remains the same across Pakistan. However, the impact on customers would only be up to Rs2.09 per unit while the rest of the increase will be adjusted via subsidy with effect from September 1, 2020.
Similarly the impact on residential consumers would be only Rs1.65 per unit. He further added that KE's quarterly adjustments had been pending for almost three years (11 quarters), and net receivables from various government entities had ballooned to over Rs70 billion, posing a threat to the company's ability to finance operations and investments.
He asserted that in order to ensure continuity of power supply to Karachi, it was of critical importance that the company's cash flows were not compromised and dues and receivables including monthly and quarterly cost adjustments were cleared at the earliest.
Copyright Business Recorder, 2020
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