K-Electric on Tuesday termed the National Electric Power Regulatory Authority's decision on Multi-Year Tariff (MYT) appeal as "unfavourable" for the power utility's investment plans. The integrated multi-year tariff determination, which is in response to K-Electric's review motion filed in April, was announced last evening. In a statement KE said "the determined tariff is not viable for investment," adding that revised tariff determination of Rs 12.77 per kWh is 20 percent lower than requested tariff, which is financially unviable.
The revised determination issued by NEPRA will have far-reaching implications for people and for Karachi's power situation as it impairs the viability of K-E's business and limits its ability to execute its investment plans. K-E, being a vertically integrated utility, requires to continuously invest to be able to meet the growing demand for electricity and ensure optimum service.
A tariff structure which allows flexibility to invest in the future projects has not been incorporated. This will adversely affect the power situation of the city and result in increased load-shedding. The Determined Tariff has not taken into consideration.
The revised tariff determined by NEPRA does not cover the full costs, which will cause serious cash flow shortfalls, putting the sustainability of the company at risk. Reduced cash flows will also hamper K-Electric's plan to pursue its generation projects through IPPs. This will also limit K-E's efforts to reduce line losses or upgrade its transmission and distribution capacity, the statement said.
Comments
Comments are closed.