ISLAMABAD: National Electric Power Regulatory Authority (Nepra) on Tuesday agreed, in principle, to allow Paisa 36 per unit hike to Karachi Electric (KE) as Quarterly Tariff Adjustment (January-March) 2021 but deferred hearing on four months ( January-April) 2021 Fuel Cost Adjustment (FCA) till second week of July 2021 aimed at passing on minimum burden to consumers.
KE has sought an adjustment (increase and decrease) in its tariff under monthly FCAs in its own and power purchase from external sources for a period from January-April 2021. For January, 2021, the power utility has sought an increase of Rs 1.978 per unit, February 2021, Rs 2.495 per unit, March, Rs 1.497 per unit whereas a reduction of Paisa 87 per unit has been sought for April 2021. The positive financial impact of FCA from January to March, 2021 is of Rs 7.17 billion whereas negative impact of April 2021 is of Rs 1.6 billion.
During the course of hearing, Chairman Nepra, Tauseef H Farooqi, noted that the power utility's FCA for three months - January, February and March 2021 - is positive while for April 2021, FCA is negative; therefore, the overall impact is of Re 1 per unit.
He enquired from KE's team about the impact of May and June 2021, and was informed that the power utility has already filed FCA for May 2021 which is negative by Paisa 64 per unit, which implies that the estimated average impact of five months will be reduced to Paisa 65 per unit from Re 1 per unit for four months. He further stated that FCA in June will be also be negative but comparatively less negative than May 2021.
The Chairman Nepra proposed that if FCA of six months January to June 2021 is clubbed, the impact on consumers will be minimal. KE's Chief Financial Officer (CFO), Aamir Ghaziani expressed his consent to defer it till the numbers of June are finalised, adding that with netting of impact of May and June, overall impact will be minimized for the consumers.
The Chairman Nepra also made it clear that in normal circumstances, the regulator does not allow burning of furnace oil, adding that if KE establishes that SSGC did not supply required RLNG/ gas to its power plants, then additional cost of FO will be allowed, otherwise, FO cost will be approved. He directed KE to submit its official correspondence with SSGC with respect to supply of gas to establish its claim of using furnace oil. KE requires 190 MMCFD RLNG and 130 MMCFD indigenous gas for its power plants.
Nepra also heard KE's requests for quarterly adjustment of Paisa 36 per unit for the quarter January-March 2021 in tariff on account of variation in Power Purchase Price (PPP) ( other than fuel), impact of T&D losses on fuel charges variation, as per the mechanism, provided in the MYT determination.
The requirement of subsidy for third quarter - January-March, 2021 has been calculated at Rs 17 billion, of which variation impact of Paisa 36 per unit is Rs 1.7 billion.
Nepra's Director Tariff stated that the regulator has received data from KE for QTA adjustments which will be verified before submission report to the Authority.
Some interveners from Karachi requested Nepra to verify the claims of KE with respect to supply of gas quantity and load shedding after 10:00 in some areas. KE's CFO confirmed that there were electricity supply shortages two weeks ago which have now been resolved after NTDC enhanced supply to over 1200 MW.
Copyright Business Recorder, 2021
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