KE’s FCA of nine months: Karachi-based businesspeople express their reservations

ISLAMABAD: Business community of Karachi on Thursday expressed serious reservations at the massive proposed provisional Fuel Charges Adjustment (FCA) of the previous nine months, (July 2023 to March 2024) sought by the K-Electric, financial impact of which will be in the range of Rs 20.279 billion to Rs 25,843 billion.

The Authority comprised of Member (Technical) Sindh Rafique Ahmad Shaikh, Member (Tariff and Finance) Mathar Niaz Rana, Member KPK Maqsood Anwar Khan and Member (Law) Amina Ahmed.

The KE, in its tariff petition has sought positive adjustment of Rs 2.46 per unit for July 2023, Rs 1.44 per unit for August 2023, Rs 2.18 per unit for September, Rs 5.40 per unit for October 2023, Rs 2.17 per unit for November 2023, Rs 1.35 per unit for December 2023 and Rs 3.78 per unit for January 2024. The power utility company has sought negative FCA adjustment of Rs 0.84 per unit for February 2024 and Rs 1.04 per unit for March 2024.

KE’s FCA petition: Nepra to hold public hearing today

The KE has presented three scenarios to the Authority for determination of FCA on provisional basis for nine months. First scenario is based on average positive impact of FCA at Rs 1.60 per unit, with total impact of Rs 20.279 billion. Second proposed scenario is based on average FCA impact of Rs 1.70 per unit with cumulative impact of Rs 21.622 billion, whereas according to third scenario, average FCA impact will be of Rs 2.04 per unit with total impact of 25.843 billion.

“We cannot pay FCA of nine months in one go. It should be staggered in nine months as industry has not included this impact in its cost calculation,” said, Rehen Jawed, Chairman Nepra and Ogra Standing Committee Korangi Association of Trade and Industry.

He said, industry is unaware of future tariff adjustments which was why it does not and cannot make any provision in its manufacturing cost.

“Apparently, the amount of proposed FCA will be based on some calculations by the KE and some mechanism will be found for its payment, but we cannot pay it because we don’t have money. Industry has collapsed either due to Nepra, the government or someone else but not because of me. We are paying due tax and working day and night, paying bills on time including cross subsidy which we should not be made to pay. Don’t overburden us to the extent that factories are converted into godowns,” he added.

The KE is aware how many Karachi factories have been converted into godowns and a number of factories have revised their load, he said, adding the KE should be questioned as to what is the situation of units sold and how much loss they will make this year.

“We have been very patient but now we cannot tolerate this situation anymore,” he lamented.

Tanveer Barry, Vice President KCCI said that the Association rejects any positive adjustment in FCA until refund of Rs 25 billion on account of incremental package.

“Positive FCA should not be approved for the KE until amount of incremental power consumption package is refunded to Karachi industry,” Tanveer Barry said adding that he opposed revenue based load shedding in the city.

The Nepra has already imposed a fine of Rs 50 million on KE for load shedding based on AT&T losses (revenue based) as it is violation of Regulator’s regulations.

Tariff and Finance, Mathar Niaz Rana raised issues like claw back amount of Rs 56 billion which is under litigation in Islamabad High Court and Industrial Support Package and directed Nepra’s tariff team to make both issues part of tariff determination.

Moonis Alvi, CEO KE informed the Authority that 640 MW renewable energy (wind and solar) will be added to the KE’s system within 1.5 or 2 years as the process is on fast track and in accordance with Nepra’s instructions. He said, more than 100 investors participated in road show on renewable energy projects; and that KE is expecting a very attractive tariff as the process is based on competitive bidding.

The Nepra noted that it has already approved an extension in RFP for renewable projects on the request of KE.

A couple of consumers including Imran Shahid of Jamaat–e-Islami raised the issue of load-shedding on some of the centres where examinations are going on. The CEO KE assured the Authority that he would look into this issue personally. He also directed KE team to look into it and match load shedding schedule with the list provided by Sindh government.

Engineer Abubak of Amreli Steel raised questions on legal hitch to proposed positive FCA of nine months, referring to a decision of Supreme Court. However, Barrister Asghar Khan, clarified that SC has not stopped the Authority from determining the FCA of nine months.

Another businessman from Karachi, Arif Bilwani and consumers’ representative Aneel Mumtaz raised some questions during the hearing.

According to KE’s spokesperson, the expected impact of proposed FCA will be between Rs 1.6 to Rs 2 per unit as compared to the average FCA of Rs 2.89 per unit applied to customers of other power distribution companies for the same period.

Copyright Business Recorder, 2024