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ISLAMABAD: The Economic Coordination Committee (ECC) has directed Power Division to expedite resolution of pending issues of KE including finalization of Power Purchase Agreement (PPA) and submit to ECC for consideration after due consultation with Task Force constituted by the Prime Minister.

These directions were issued by the ECC headed by Finance Minister Ishaq Dar on November 29, 2022 when the issue of uniform tariff for K-Electric came under discussion.

CEO KE, Syed Moonis Abdullah Alvi, recently wrote a letter to head of Task Force of Energy, Shahid Khaqan Abbasi, former Prime Minister, seeking his help for execution of Power Purchase Agency Agreement (PPAA), Interconnection Agreement (IA) and Tariff Differential Subsidy Agreement.

According to power utility, these agreements are critical to ensure continuity of power supply to Karachi and avoid further accumulation of circular debt. It suggested a summary is required to be moved by Power Division placing these agreements including a few open items before the competent forum for decision and way forward.

Alvi has also demanded that summary of Quarterly Tariff Adjustments for July 2016 to June 2022 needs to be moved by Power Division for approval of ECC as the consequential financial impact has crossed Rs 280 billion on KE’s Tariff Differential Subsidy (TDS) receivables from GoP (up to September 2022) and additionally Rs 69 billion already verified is also pending with the GoP.

CEO KE has also placed the following submissions: (i) Regulations must be simplified; (ii) deregulate the sector, and have a level playing field across the country; (iii) encourage entities to compete in a fair market where the price is demand driven; (iv) add efficiencies in the energy sector value chain and, in turn, pass benefits to the consumers; and (v) induce digitalization for transformation in the larger Discos.

On November 29, 2022, Power Division informed the forum that under section 31(7) of the Regulation of Generation, Transmission and Distribution of Electric Power Act, 1992 National Electric Power Regulatory Authority (Nepra), had determined periodic Adjustment for Discos in Tariff for fourth quarter of FY 2021-22. In light of this determination, the Nepra had recommended a uniform rate for the fourth quarter under Quarterly Adjustment mechanism of FY 2021-22 for the consumers of Discos for four months. In accordance with section 5.6.3 of National Electricity policy, 2021, the Government maintains a uniform consumer-end tariff for K-Electric and state-owned distribution companies (even after privatisation) through incorporation of direct/ indirect subsidies. Accordingly, KE applicable uniform variable charge was required to be modified to maintain the uniform tariff across the country with a recovery period of four months.

After discussion, ECC granted permission to Power Division to approach the Nepra for issuing separate Schedule of Tariff after incorporating tariff rationalisation and upon approval of the Nepra, notify it in the official gazette by way of modification in SRO No. S7S (1)/ 2019 as modified from time to time.

The ECC further directed the Power Division to expedite submission of case regarding uniform application of FCA for KE and Discos consumers.

The ECC also directed Power Division to expedite resolution of pending issues of KE including finalization of Power Purchase Agreement and submit the same to the ECC for consideration after due consideration by Task Force on KE constituted by Prime Minister.

Copyright Business Recorder, 2022

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