ISLAMABAD: K-Electric (KE) on Wednesday showed willingness to an out of court settlement of seven-year long outstanding issue of clawback of Rs 47 billion with National Electric Power Regulatory Authority (Nepra), supposed to be refunded to consumers.
The out of court settlement was officially offered by Chief Executive Officer (CFO), Aamir Ghaziani during a public hearing on KE’s FCA adjustment request for March 2023. The Authority comprising, Chairman, Tauseef Farooqi, Member Sindh, Rafique Ahmad Shaikh, Member Khyber Pakhtunkhwa Maqsood Anwar Khan, Member Balochistan Mathar Niaz Rana and Member Punjab. Amina Ahmed approved positive adjustment of Rs 3.70 per unit in KE’s tariff for March to be recovered in May’s billings. The total financial impact of this adjustment would be Rs 5.47 billion.
In another hearing, the Authority approved positive adjustment of Rs 0.34 per unit in FCA’s for Discos of March against request of Rs 1.17 per unit, financial impact of which will be Rs 2.9 billion. During hearing on KE’s request for adjustment in its FCA, the issue of clawback which is pending with the Sindh High Court due to stay order as the company has shown net loss of Rs 39.4 billion during the first nine months of current fiscal year. Chairman NEPRA, in an unpleasant mood, stated that the regulator is trying to get the stay vacated but could not succeed as power utility company is not ready to resolve it with the regulator amicably.
KE quizzed by Nepra for its cost-reflective tariff demand
CFO, KE, Aamir Ghaziani offered an out of court settlement with the regulator, as he is authorised to talk on this issue.
“Let’s sit today for an out of court settlement of clawback dispute as I’m authorised to talk on behalf of the company,” said Ghaziani.
In replying to a question, KE officials stated that demand of power utility company has dipped by 9 per cent in March 2023 as compared to corresponding month of 2022. The dip will have financial impact of billions of rupees with the company already facing net loss of over Rs 39 billion in nine months.
Nepra officials noted that average tariff of KE’s own plant stood at Rs 26.44 per unit whereas rate of electricity from national grid was Rs 9.51 per unit in March 2023. The issue of unneeded supply from Lotte’s power plant also came under discussion and Chairman Nepra termed it as an alarming example. Commentators from Karachi, Arif Bilwani, Tanveer Barry, Muhammad Usman, Aneel Mumtaz and Ayaz Nagaria raised different questions about generation cost of KE and other matters.
Barry said that KE FCA is going up because of its inefficient plant. KE generated 50% from Bin Qasim -III which is, according to its own estimate 60% efficient but with a heavy FCA. He questioned as to how industry will survive with heavy FCA along with QTAs and surcharges, in addition to taxes.
During the hearing, Chairman Nepra brushed aside speculations of resignation before expiry of his four-year contract, saying that he would complete his term.
During the hearing on Discos FCA hearing, it was stated that electricity demand plunged by 23 per cent in March 2023 as compared to same month of 2022 whereas overall demand has dipped by 8 per cent. The possible reasons for the dip in electricity demand was unprecedented cold weather in March as compared to last year and closure of industry, which is evident from massive reduction in exports.
In reply to a question, CPPA-G Deputy Director Naveed Qaisar informed that currently circular debt stock stood at Rs 2.5 trillion with a flow of Rs 289 billion during first nine months (three quarters) of current fiscal year. He said an amount of Rs 75 billion has been added to the circular debt during this period.
Mathar Niaz Rana quizzed CPPA-G and NPCC officials for unleashing load shedding when surplus electricity is available arguing that the amount of capacity payment can be reduced with utilization of supply to the consumers.
General Manager, National Power Control Centre (NPCC), Sajjad Akhtar noted that currently maximum demand is 19,000 MW whereas total installed capacity is 43,000 MW and available capacity is 36,000 MW. He was snubbed by Chairman NEPRA for failing to defend NTDC against proposed deduction of Rs 485 million by Nepra due to permanent fault in Guddu-Shikarpur 01 CCKT from February 28 to March 16, 2023.
Member Sindh Rafique Ahmad Shaikh raised questions on the performance of power sector entities, asking why load shedding was not lifted when demand was too in low in March. He expressed his anger at the officials for not responding to his simple questions with regard to load shedding when surplus RLNG for available for power generation.
He further contended that with lifting of load shedding on high loss feeders, the amount of capacity payment could have been reduced.
“The point I want to make is that the country’s power sector system has completely failed. Overcharging to consumers is due to governance issues,” he added.
Copyright Business Recorder, 2023
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