ISLAMABAD: National Electric Power Regulatory Authority (NEPRA) on Tuesday agreed in principle to allow Karachi Electric (KE) to recover over Rs 9 billion (Rs 5.28 per unit) from consumers for April 2022 under monthly Fuel Charge Adjustment (FCA) and QTA of Rs 3.90 per unit for January-March 2021-22.
The Authority, comprising Chairman Tauseef H. Farooqi, Vice Chairman, Rafique Ahmad Shaikh and Member KP, Maqsood Anwar Khan officiated public hearing. KE’s team led by Chief Financial Officer (CFO), Aamir Ghaziani responded to questions on inefficiencies and issues related to the KE raised by the Authority and the representatives of public and business community.
KE, in its requests, had sought positive adjustment of Rs 4.859 per unit in FCA of April 2022 to recover Rs 9.353 billion from consumers but later the power utility revised it upward to Rs 5.307 per unit as per CPPA-G rates of April 2022 to recover Rs 10.225 billion. However, tariff section of NEPRA proposed adjustment of Rs 0.027 per unit on account of differences in costs and Rs 0.001 per unit proposed by Monitoring and Enforcement (M&E) Section due to underutilization of efficient sources, cost of which was Rs 1.4 million.
After considering the deductions proposed by Tariff Section and M&E Section, the Authority agreed to allow positive adjustment of Rs 5.279 per unit.
According to the regulator, KE was already charging FCA of Rs 4. 83 per unit for March 2022 which implies that the tariff of consumers will increase by only Rs 0.43 per unit for April 2022 at new FCA rate of Rs 5.28 per unit.
KE’s tariff increased by Rs7.82/unit
KE’s team noted during the hearing that an additional financial burden of Rs 4 billion was incurred in April due to higher prices of furnace oil in the international market as furnace oil prices have posted 22 percent increase.
The Authority also approved revised QTA of Rs 3.892 per unit for third quarter (Jan-March) 2021-22. Initially, power utility had sought positive adjustment of Rs 4.521 per unit for third quarter but later revised it down to Rs 3.892 per unit after some internal adjustments.
During the hearing NEPRA observed that KE was generating 24 percent electricity from furnace oil and purchasing 48 per cent from CPPA-G, and inquired why the power utility did not go for renewable energy.
CFO KE responded that prices of renewable energy like solar was on higher side three to four years ago; however, now prices of solar have come down and KE was considering generating 500 MW from renewable resources.
Unnecessary debate about coal for the “disbanded” power plant of KE was also witnessed between the Authority and CFO KE.
Replying to a question regarding Gas Supply Agreement (GSA) with SSGC, CFO explained that, Secretary Petroleum, Ali Raza Bhutta recently visited Karachi wherein he directed both KE and SSGC to prepare a list of minimised issues and to provide him with their resolution.
The issue of gas supply has been raised at various forums. The issue of base tariff of power sector also came under discussion during the hearing. NEPRA officials stated that the Federal Government will file a petition with respect to base tariff.
NEPRA officials argued that base tariff is an issue of all the companies not only KE, adding that reasons for the increase in basic tariffs are well known to everyone.
NEPRA also raised the issue of load shedding in Karachi at night as consumers across the city are angry at non-availability of electricity. KE officials responded that load shedding at night is being done as per announced schedule, adding that there is no unannounced load shedding in the city.
KE officials maintained that demand for electricity at night is up to 3500 MW, adding power outage are about four hours during peak time Chairman NEPRA directed KE to hold regular meetings with all stakeholders and take them into confidence regarding initiatives.
Tanveer Barry, Chairman public sector utilities, power and gas sub-Committee said that once again Karachiites are facing heavy FCA for the month of April 2022.
“As everybody knows KE’s power plants are inefficient and produce expensive electricity and purchase expensive electricity. Why do the consumers bear this FCA? We protest against and reject the FCA,” he said, maintaining that KE is budgeted to receive subsidy of Rs 80 billion next financial year, but no relief is being given to the consumers. Barry proposed that detailed and technical audit of all power plants of KE should be conducted as power plants are operating on higher heat rate.
He maintained that KE has not signed GSA with SSGC yet because former has to pay billions of rupees to SSGC and suggested that both parties must resolve this matter for the benefit of the city.
Copyright Business Recorder, 2022
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