ISLAMABAD: Terming the current mechanism of allocation of supplemental charges unjustified, Peshawar Electric Power Company (Pesco) has sought revision of the criteria for allocation of supplemental charges by adjusting the amount receivables from GoP because of subsidy/supplies to AJ&K/Tesco share as well as IDTR.
In a letter to Chief Executive Officer, Central Power Purchasing Agency-Guaranteed (CPPA-G), Chief Executive Officer, Pesco, stated that CPPA-G has charged supplemental charges amounting to Rs. 4.664 billion to Pesco for the month of September 2024. The cumulative amount charged by CPPA-G to Pesco on account of supplemental charges stood at Rs. 184.952 billion for the period up to Sep-2024.
According to Pesco, as per its Board Resolution and despite repeated requests, CPPA-G had not provided party wise details of the supplemental charges charged to Pesco. However, it was conveyed that the supplemental charges are allocated on the basis of “Month-end Payables”.
Pesco emphasized that any amount charged to it on account of power purchase is regulated under NEPRA Rules & Regulation and any decisions in this regard must be aligned with the Regulatory Frameworks. Furthermore, Nepra has not allowed the supplemental charges in various determinations of Pesco rather during hearing of Pesco tariff petition for FY2015-16, Nepra advised CPPA-G to file a separate petition for supplemental charges for the entire sector.
Pesco maintains that subsidy is an integral component of the pricing structure, and any delays or non-payment by the Government of Pakistan (GoP) are entirely dependent upon the Finance Division and GoP budgetary provision. PESCO lodges its monthly subsidy claims on timely basis and despite the fact that these claims have been verified but still Rs. 33.943 billion (up to Sep-24) is receivable on account of subsidy from the Government of Pakistan. Moreover, in current scenario of Inter-DISCO Tariff Rationalization (IDTR), the due credit on account of it also impacts the payment position resulting in overstatement of payables of certain Discos and understatement of the remaining Discos, hence the basis of allocating supplemental charges without adjustment of AJK subsidy, TDS and IDTR needs re-consideration.
As per Board resolution, Pesco has already requested to consider subsidy and AJ&K receivables in calculation of the supplemental charges, as these are part of the cost and its due credit of outstanding amount may be allowed to Pesco as the onus of delay in payment of subsidy and AJ&K receivables is not on Pesco.
PESCO further emphasized that CPPA-G has issued cumulative invoices for power purchases and supplemental charges to Pesco, including charges related to Tesco, for the period up to FY 2014-15. Accordingly, the Supplemental Charges may be revised, to segregate the Tesco share separately.
Sharing the details of supplemental charges, Pesco emphasized that the statement is prepared for the sake of understanding only and a mechanism for its recovery is required, and in this regard Nepra has already directed CPPA-G during PESCO Tariff Petition hearing of FY 2015-16 to file a separate petition for supplemental charges.
“Although Nepra has allowed offsetting the said charges against the Late Payment Charges recovered from consumers, however this is not enough to cover the said charges. Pesco “collection” of Supplemental Charges is only Rs. 19.179 billion, against Rs. 159.322 billion billed by CPPA-G for the period FY 2014-15 to FY 2024-25 (up to Sep-24),” said CEO Pesco.
The Disco claimed that CPPA-G charged supplemental charges totaling Rs 10.682 billion for July2024, as conveyed by the Additional Manager Finance (billing) of CPPA-G, these charges reflect an abnormal increase compared to the supplemental charges of the previous months. However, it is difficult to comprehend why CPPA-G made a significant deviation in delay payment charges, raising concerns about the rationale behind this substantial adjustment. Further clarification from CPPA-G on this matter may be required.
“Complete detail of supplemental charges being charged/allocated to Pesco be provided along with party-wise breakup of the amount recorded by CPPA-G on account of Supplemental Charges/Interest Charges/ Markup Payable/ paidto power producers/generators,” Pesco said requesting to revise the criteria for allocation of Supplemental Charges by adjusting the amount receivables from GoP because of subsidy/supplies to AJ&K/Tesco share as well as IDTR and revised calculations along with details of the charges to be shared with PESCO as per resolution of Pesco BOD,” Pesco stated.
Copyright Business Recorder, 2024
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