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ISLAMABAD: National Electric Power Regulatory Authority (Nepra) on Monday approved an increase of Rs 9.42 per unit in tariff of Karachi Electric (KE) for May 2022 under monthly Fuel Charges Component (FCA) amid consumers’ hue and cry about load shedding duration of 18 hours a day.

The decision to approve positive adjustment of Rs 9.42 per unit against KE’s request of Rs 11.33 per unit was taken at a public hearing, officiated by Chairman Nepra, Tauseef. H. Farooqi, and comprising Vice Chairman, Rafique Ahmad Shaikh and Engineer Maqsood Anwar Khan who quizzed KE’s team comprising, CEO Moonis Alvi, CFO, Aamir Ghaziani and Director Finance, Ayaz Jaffar.

According to KE, the major impact on the monthly Fuel cost adjustment of May 2022 is due to an increase in the fuel price of Furnace Oil and power purchased from CPPA-G. The price of Furnace Oil in May 2022 has increased by 38% from March 2022 while the price of RLNG between March and May 2022 has increased by 50%.

During the hearing, the issues related to less use of diesel in May, higher use of furnace oil, less supply of LNG and problems in supply of indigenous gas as per the pact were highlighted by the Authority, KCCI, consumers’ representatives and Nepra officials.

The Authority took serious note of KE’s failure in not building its HSD’s required stock as per the generation licence and decided to deduct over Rs 1 billion from the power utility in this regard.

Member KP Maqsood Anwar Khan announced that since the power utility did not honour contract of building its HSD reserves, the Authority would deduct this amount. Nepra is expected to despatch its team to inspect fuel reserves of KE.

The officials of power utility maintained that there was a shortage of HSD in the country which is why reserves in May were used in June. They also claimed that HSD reserves are built as per allowed financial limits as Nepra does not allow extra cost in this regard.

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Their logic; however, was not given any weightage by the regulator. The consumers’ representatives expressed anger at KE for up to 18 hours’ load shedding. However, their claim of load shedding duration was refuted by CEO, KE.

He said, an agreement was signed with Sindh Government, according to which schedule of load management was shared with the Energy Department of Sindh Government and every consumer can check load management schedule of their respective areas.

He acknowledged that now those areas are also facing load shedding who are good consumers and pay their bills.

KE requested Nepra to approve FCA of May 2022 along with April 2022 so that the power utility can honour its commitments with the oil supplier and SSGC. KE team also sought Nepra’s help to resolve gas related issues, pending since long.

KE said that it is getting 1000-1100 MW of electricity from national grid, adding that efforts are afoot to get cheap electricity from renewable resources.

CEO KE also highlighted the financial woes of the company due to non-payment of subsidy amount and at the same time acknowledged that KE is not paying the federal government against electricity from national grid.

Tanveer Barry chairman Public sector utilities Power and gas Sub-Committee KCCI said that once again industry in Karachi is facing heavy FCA which is the highest in the last 20 years as it has to pay 68% more.

“How industry will survive; industries won’t operate if this trend in electricity price continues,” he said adding that exporters’ gas and electricity relief package has expired and the government is not renewing it.

He further contended that exporters will not be able to compete in the international market. KE generation cost was Rs 40.580kw and cost of power purchases was Rs 16.723/kw which implies that KE was generating high cost of electricity. Our demand is to shut down all inefficient power plants and KE structure should be unbundled, he stated.

He said, in Karachi territory there are many efficient power plants including nuclear and it is bad luck for citizens of Karachi that they are getting expensive electricity from KE. In May 2022, KE generated electricity from RLNG instead of gas because it had not signed GSA with SSG, as it was a defaulter. He suggested that KE should purchase more electricity from NTDC.

As per IMF condition the government will raise tariff at the rate of 7.92 and the base tariff will rise from Rs 16.91 to 24.82 per unit.

Barry maintained that Karachi coastal areas are best for producing thousands of megawatts of wind energy and recommended that “we should work on wind energy, solar energy and we also have a long coastal line which means we can also work on tidal power.”

Regarding load shedding, Barry said that according to Nepra official document KE declared 2817.114 MW but KE is only generating 1700 MW but enjoying all benefits. KE did not upgrade its network and Karachi is facing severe load shedding day and night. Nepra launched CTBCM but the wheeling policy is not yet approved so the question arises as to how CTBCM will achieve its goal.

Nepra said in April, customers were charged FCA of Rs 5 27 per unit which was only for one month whereas in May FCA will be Rs 9.42 per unit -Rs 4.15 per unit higher than April.

Copyright Business Recorder, 2022

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