ISLAMABAD: National Electric Power Regulatory Authority (Nepra) has raised questions on the proposed five-year investment plan of Gujranwala Electric Power Company (Gepco) as proportion of reduction in losses is said to be not correlated with volume of investment.
During a public hearing on Gepco’s Multi-Year Tariff (MYT) 2020-25, the regulator was informed that the company which reduced losses to 9.23 per cent from the target of 9.41 per cent, plans to further reduce losses to 9.31 per in 2021-22, 9.21 per cent in 2022-23, 9.11 per cent in 2023-24 and 9 per cent by 2024-25.
The Authority comprising, Chairman Nepra, Tauseef. H. Farooqi, Member Sindh, Rafique Ahmad Shaikh and Member KP, Engineer Maqsood Anwar, conducted the public hearing.
According to the company, its Board of Directors has approved reduction in losses to 8.5 per cent with an investment of Rs 11 billion during the first year. However, the company has sought around Rs 6 billion per annum for investment for five years.
Raising questions on the proposed average investment of Rs 6 billion per annum, the Chairman Nepra, Tauseef H. Farooqi, argued that the regulator has several queries with respect to the proposed investment plan and strangely the company is seeking approval of Rs 11 billion for investment in the first year.
“You people think, there is an ATM machine at Nepra or a Double Shah is sitting here who will accord approval to company’s every investment proposal,” said the Chairman Nepra, addressing the case officer of Gepco, who claimed he is from the private sector.
Gepco claimed that it would reduce losses by 0.1 per cent per annum with an investment of Rs about 6 billion. The value of one per cent loss is Rs706 million.
“If this amount is deposited in a bank account it will generate 5 or 6 percent [interest],” said the Chairman, questioning the benefit of investment.
The CFO of the company argued that the payback period of this investment is three years as it will not only expand the system but also improve existing infrastructure. The company has spent Rs 20 billion on the system during the last five or six years against the allowed investment of Rs 34 billion.
The company’s Power Purchase Price (PPP) which was Rs 11.92 per unit in 2020-21, will increase to Rs 14.81 per unit in 2021-22, Rs 16.37 per unit in 2022-23, Rs 16.55 per unit in 2023-24 and Rs 17.66 per unit by 2024-25.
The company’s officials also claimed that they feel the company is now being given independence practically as in the past it was independent only on paper.
Chairman Nepra enquired about Corporate Social Responsibility (CSR) activities, urging all the Discos to also focus on CSR activities in their respective areas of jurisdiction.
Copyright Business Recorder, 2021