Govt plans to bring FCA mechanism of KE on a par with other Discos’

ISLAMABAD: The Federal Government plans to apply Fuel Charges Adjustment (FCA) mechanism in K-Electric (KE) at par with power Distribution Companies (Discos), which will put additional financial burden on Karachiites.

This was revealed during a public hearing held in National Electric Power Regulatory Authority (Nepra) on a Government Motion in which Power Division proposed to apply Rs 0.5087/kWh on all KE consumers for consumption of September, October and November 2022 to be recovered in November, December 2022 and January 2023. The Ministry has requested to issue a separate Schedule of Tariff (SoT) with prospective application of applicable uniform rates.

Nepra has calculated KE’s total QTA at Rs 3.55/ kWh based on different variables but government has decided to recover the same amount of QTA from KE consumers which is also being recovered from Discos consumers. This implies that the government is giving Rs 3.05/ kWh subsidy to KE consumers.

Presently, the government is expending subsidy of Rs 290 billion to the consumers of KE. As per the decision of QTA of fourth quarter of FY 2021-22, KE’s tariff is 43.38 kWh, whereas Rs 26.04 kWh is being charged; it implies an increase to Rs 26.55 kWh; and the government will pick over Rs 12 kWh as subsidy.

During the hearing, officiated by Chairman Nepra, Tauseef H Farooqui, Member Sindh, Rafique Ahmad Shaikh and Member KP, Maqsood Anwar Khan, it was noted that the Power Division has sent a summary on applicability of uniform FCA in KE’s jurisdiction at par with Discos. It was further noted that Nepra has sent its comments on the summary. Nepra is also working on replacement of KE’s inefficient plants to bring down its generation cost.

KE seeks negative adjustment in its Sept tariff

Arif Bilwani, a representative of consumers, proposed that uniform FCA should also be made applicable in KE. He said KE’s generation is very expensive and suggested that the power utility should be unbundled. The officials of CPPA-G stated that the government is also working on a proposal to give QTA’s notification powers to Nepra like the FCAs.

Bilwani further stated that in the past there was no need to apply uniform FCA but for the last several months wide difference in FCAs of Discos and KE has been noted and it was felt that a uniform FCA across the country should be applied.

He also maintained that KE consumers always paid less FCA compared to Discos in the past, which is now being rationalized. Chairman Nepra noted that when the government and KE’s consumer representatives want to apply uniform FCA in KE, then Nepra should not have any objection to it.

Tanveer Barry, representative from KCCI, said that quarterly adjustments are usually not passed on to consumers so why was the Government of Pakistan requesting passing on Rs 0.5087/kWh to consumers in 2022.

He pointed out that the Government has already increased the base tariff at Rs 7.92/kwh and fixed charges are now applicable based on 50% of sanctioned load or Actual MDI for the month whichever is higher, which is not acceptable.

Aneel Mumtaz and Muhammad Imran, also raised questions about FCAs, QTA and other issues related to KE.

Copyright Business Recorder, 2022