ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) has approved extension in concessional tariff of Rs12.96 paisa per unit for industry at peak hours across the country till June 30, 2021 on the request of Power Division and Karachi Electric. However, a proposal for automatic incorporation of extension in industrial package in the then prevailing tariff structure of Discos and K-Electric has been rejected.
Ministry of Energy (MoE) had submitted that a review would be carried out by March 31, 2021, for continuation or other-wise of the package beyond April 2021. The MoE submitted that the industrial support package has resulted in growth ranging from 4.29% in November 2020 to around 17% in January 2021. The MoE further provided the following break up of growth in terms of peak & off-peak hours, showing greater growth during peak hours.
Budget cumulative subsidy wad approximately Rs.26 billion for the package for the period commencing from May 1, 2021 till June 30, 2022, with the timely monthly disbursement by the Finance Division on the basis of actual consumption. The financial impact of the incentive applicable till April 30, 2021 has been calculated at Rs 14 billion.
On May 26, 2021, during a public hearing at Nepra, the MoE stated that actual economic impact of the industrial package requires detailed analysis/workings, however, as per the available information, it is clear that cost of electricity is in direct proxy to growth in GDP. The MoE further submitted that a joint study will be conducted with PIDE to evaluate the true impact of the package.
On the issue of expected future benefits, the MoE submitted that going forward, based on the existing trends, a growth of around 24% for Discos and around 40% in K-Electric system is expected during next year.
On the issue, the representative of NPCC submitted that growth has largely been witnessed in Fesco, Mepco, Lesco & Gepco because of this package, as industrial consumption is largely in these areas.
It was further explained that although sufficient power balance is available in winter months, however, certain constraints would be observed during summer. As per the MoE, main load growth has been in Fesco , Mepco and Gepco , which may result in load management of around 800 MW in Fesco , as a worst case scenario, owing to overloading of grids and non-commissioning of Trimmu RLNG power plant, which has been delayed by around one year. The MoE further submitted that CCoE while approving the extension of industrial package was apprised of the load management issues and all permutations and scenarios were discussed therein.
K-Electric during the hearing submitted that there would not be any load management in its system due to the implementation of the industrial package, as the incremental demand would be managed through utilization of own fleet as well as through incremental utilization from national grid.
The Authority showed serious concerns regarding proposed load management by MoE/NPCC, and observed that same is neither in the interest of consumers nor the system as a whole, especially in the context of recoveries of fixed costs. In view thereof, a firm plan may be prepared ensuring minimal impact on consumers with equitable treatment.
The Authority observed that the spirit of ISP was to provide incentive to industrial consumers, for their incremental consumption, therefore, exclusion of small consumers is against the spirit of the decision. Hence the Package be extended to all B-I industrial consumers including those not having ToU metering arrangement.
The MoE also submitted that with the extension in abolishment of Peak tariff for industrial consumers, the package for incremental consumption would become applicable for all hours of the day. In addition, the MoE has requested that any decision by the Federal Government regarding extension/abolishment of current time-of-use tariff scheme for future iterations, may be automatically incorporated in the then prevailing tariff structure of Discos, without need of any additional Motion, till the applicability of Industrial Support package.
In view of the discussions, the Authority, in its decision has stated that it has no objection in approving the MoE and KE proposals regarding extension of peak tariff for industrial consumer till June 30, 2022, both for the consumers of Discos and K-Electric, as it does not have any impact on Nepra determined tariff, since the Federal Government intends to bridge the gap through provision of additional subsidy. Hence, the proposal of the MoE and request of KE, whereby, during peak hours, the off peak rate along with applicable quarterly adjustments would be charged and the difference in this regard would be picked up by the GoP as subsidy, is approved till June 30, 2022.
Regarding request of the MoE and K-Electric, for automatic incorporation of extension in industrial package in the then prevailing tariff structure of Discos and K-Electric, the Authority has considered that before giving any such approvals, complete justification of the proposal along-with input from all the stakeholders needs to be taken into account, therefore, request of MoE and K-Electric for automatic extension of ISP is not accepted.
Nepra has also directed that industrial package regarding incremental sales be extended to all industrial consumers, including B-1 (Non-ToU) consumers.
Copyright Business Recorder, 2021