ISLAMABAD: The federal government on Monday came under severe criticism from business community and domestic consumers for seeking unjustified over Rs 10 per unit positive adjustment from consumers of K-Electric under QTA mechanism.
K-Electric Chief Executive Syed Moonis Abdullah Alvi expressed his fear that the proposed positive impact of QTA will face legal challenge like the QTA of July 2023 which will affect recovery of power utility company.
The Authority comprising Chairman Waseem Mukhtar, Member (Technical), Engr. Rafique Ahmad Shaikh, Member (Licensing), Engr. Maqsood Anwar Khan, Member (Technical & Finance), Mathar Niaz Rana and Member (Law), Amina Ahmed officiated public hearing.
“Such type of increase has negative impact on economic activity in the country. Tariff policy needs to be seen in all aspects of economics and affordability,” observed Member NEPRA.
Of proposed positive adjustment of Rs 10.32 per unit in QTA, the effective net increase will be of Rs 8.44 per unit after expiry existing QTA of Rs 1.55 per unit. NEPRA also came under criticism for allowing “unbridled”increase in tariff.
Tanveer Barry from KCCI, Arif Bilwani, Jamaat-e-Islami (JI) Karachi Ameer Hafiz Naeem-ur-Rehman, Aneel Mumtaz opposed any increase in tariff of K-E under QTA mechanism. They requested NEPRA to reject federal government’s motion as it will make electricity unaffordable for the consumers of Karachi. Business community was of the view that new proposed increase will shut the remaining operating industry. It was also suggested impact of QTA should be passed in time as industry has already sold their products.
“We reject any imposition of quarterly adjustments because of increase in the base tariff, tariff is already very high. Further increase in tariff will close existing industry as it cannot survive in international market,” said Tanveer Barry.
He said that pending payment of Rs 7 billion against consumption of incremental units has not cleared yet. Circular debt has gone up to Rs 2.5 trillion, capacity payment to touch Rs 3.766 trillion per annum by FY 31 but no measures have been taken to control this by the Power Division.
However, KE CFO Aamir Ghaziani termed the charges of Hafiz Naeem-ur-Rehman as political and not reflecting ground realities.
According to NEPRA, the Ministry of Energy (MoE) has filed a motion with respect to recommendations of consumer-end tariff for KE and policy guidelines for uniform quarterly adjustments under section 7 and 31 of the NEPRA Act, 1997.
MoE requested to apply periodic adjustment for the second quarter of FY 2022-23 for Discos of Rs 0.4689/kWh on the consumers of KE in order to maintain uniform tariff across the country. For this, MoE has requested to issue separate Schedule of Tariff (SoT) for KE with prospective application of applicable uniform rates after incorporating tariff rationalization. The adjustment shall be applicable on the consumption of April, May and June 2023, to be recovered from consumers in September, October and November 2023 respectively.
The MoE has also submitted policy guidelines for uniform application of quarterly adjustment on Discos and KE consumers. Based on the policy guidelines, the MoE has requested NEPRA to reconsider its decision of May 22, 2023 and accordingly issue separate SoT for KE with prospective application of applicable uniform rates, after incorporating tariff rationalization requested in Motion of March 17, 2023(Rs 1.4874 to Rs 4.4547/kWh for different consumer categories).
The application of Rs 3.21 per unit has been sought in October and November 2023. Discos consumers have already paid this amount.
The adjustment would be applicable on the consumption of Feb and March 2023 to be recovered from consumers in September and October, 2023 respectively. The impact of surcharge of Rs 1.52 per unit will be recovered from December 23 to November 24, hearing of which has already been conducted.
Further, the Ministry of Energy, during the hearing in the matter of 4th quarterly adjustment of Discos for the FY 2022-23 held on August 23, 2023, submitted to apply the same Rs 3.55 per unit on KE consumers as well in the light of policy guidelines. This positive adjustment should be recovered in six months i.e. October 23 to March 24.
“We are fully aware of current situation and working on multiple fronts and tariff will also be taken to some level without effecting circular debt or any other targets,” said, Mehfooz Bhatti, Joint Secretary (Power Finance).
Power Division argued that there was a time lag in QTA in Discos which has now almost been covered.
Federal government has paid subsidy of Rs 428 billion to the consumers of K-Electric during the last four to five years. Another amount of Rs 298 billion has been earmarked for KE consumers.
During the hearing, Chairman NEPRA noted that Member (Tariff) is working on a mechanism which would suggest that taxes are not charged from consumers.
Copyright Business Recorder, 2023