KE tells Nepra: About Rs 98.6 billion invested in distribution sector so far

KARACHI: Chief Financial Officer K-Electric, Amir Ghaziani during his detailed presentation at the public hearing here on Monday informed the National Electric Power Regulatory Authority (Nepra) and consumers that KE since its privatization has invested around Rs 98.6 billion in distribution sector. He said the targeted investments and initiatives have significantly contributed in distribution infrastructure. Number of feeders has been increased from 1021 in 2008 to 1890 in 2020 and PMTs from 9023 in 2005 to 28842 in 2020. The distribution capacity of the company has enhanced up to 104 percent during the last 15 years. Our distribution capacity was around 3882 MVAs in 2005 which now stands at 7918MVAs.

While quoting the state of the industry report 2018, the KE CFO said, "Nepra has acknowledged KE's improved performance in comparison with other discos. Subsequent to privatization, from 2009 to 2018, KE has shown improved operational performance in its transmission and distribution sectors whereas other discos showed deterioration or barely maintained their performance levels during the same period."

On power outages, he said that KE's loadshedding policy is in line with the national power policy 2013. KE has been able to exempt over 75 percent of feeders from loadshedding.

When Chairperson Nepra Tauseef H. Farooqi, who was presiding over the session of the public hearing, asked him about the KE's plan, Amir told the chairperson that the power company planned Rs 250 billion investment in the next three years. Its power generation will go up to 4511 MW in 2023 as against the existing 3202MW. The generation capacity would also enhance from the existing 7916 MVAs to 8794 MVAs in 2023.

Amir also raised a few questions on the proposed modification in KE's distribution license. He asked, "Whether the new entrants would provide electricity in high-loss low-income areas. Will the uniform tariff policy be implemented or will electricity become more expensive for some areas? Will the new entrants invest in transmission and distribution network in the city?"

Amir said that KE welcomes competition, only if it is fair. However, he called for a level playing field for all market players including the KE.

During Nepra's chaotic public hearing held at a private hotel to seek comments from the consumers in the matter of proposed modification in the KE distribution license, consumers including traders, industrialists, and political parties demanded the National Electric Power Regulatory Authority (Nepra) to end the Karachi-based power utility's monopoly in distribution sector, and allow other players to compete in the market.

The session chaired by Chairperson Nepra Tauseef H. Farooqi began on time, and in his initial remarks, Farooqi informed the participants that his team has come from Islamabad to conduct the hearing on the single point agenda "the proposed modification in KE's distribution license', requesting the participants to follow the code of conduct, saying the hearing is being held on the directives of the Supreme Court (SC).

"We are here to understand ground realities, not to make a hasty decision. All you need is to remain calm, just speak on your turn, and present your case solidly so that we can find out a 'just solution' based on justice."

"Investors are respectable for us. The sole purpose of bringing investment into the Pakistan should be service level improvement. If the foreign investment is translated into better service delivery, we want more. And if the service level is not being maintained by the investor/ licensee, then it's the responsibility of the regulator to take notice and bring about changers /modifications in the greater interest of the citizens. As for as the KE is concerned, 'something wrong has happened somewhere, and that's why we are here to listen you all," Farooqi said.

He said Nepra received as many as 100 written comments from the consumers on the said matter. However, due to shortage of time, only 15 top consumers/parties have been selected to have their views today.

They were amongst Karachi Chambers of Commerce and Industry (KCCI), F B Area Association of Trade and Industry, LRBT, Jamaat-e-Islami, Public Interest Law Association, the Indus Hospital, Shams Power, SIUT, Ex-UC-42 Chairman Machar Colony Muhibullah, Pakistan Institute of Large Steel Producers, Corporate Pakistan Group, etc. However, around 50 percent of them were either remained absent or came late in the session.

The proceedings at the hearing broke down when the chairman Nepra invited KE' CEO to present his case, causing chaotic situation when consumers urged for taking the floor before the utility gave its view. As the situation worsened amidst the noisy environment, the chairman Nepra adjourned the proceedings for half an hour.

"If our complaints are not being heard and entertained here, then why was this hearing scheduled today. KE has failed to ensure safe and uninterrupted supply to the city," a participant said.

Later, when the session resumed, a consumer namely Kamal Asfar stood up and accused MQM-P of not opposing privatization of KE at the behest of Altaf Hussain, which triggered a threatening response from Khawja Izharul Hassan of MQM-P to throw him out from the hall. The situation further aggravated when JI Karachi Amir Hafiz Naeem ur Rahman strongly reacted to Izhar's remarks and blamed THE MQM's militant wing of supporting KE.

CEO KE Moonis Abdullah Alvi also left the hearing in a hurry when the event turned chaotic. The public outcry was so strong, leading to harsh exchange of words between those at the panel and the aggrieved participants.

Industrialist and Chairman of KCCI's Businessmen Group Siraj Kassem Teli was the first amongst the consumers to present his point of view. He acknowledged that KE has improved its service delivery as compared to its post-privatization performance. However he said a single power company can't cater the growing demand of a rapidly expanding city like Karachi. He urged the Nepra to end KE's exclusive right to distribute electricity to the consumers and allow others players. The business community of Karachi was ready to set up a new power distribution company; if not, foreign companies can also invest. The government should provide options for the investors, he said.

A woman saying she represented the posh Defence Housing Authority (DHA) blamed KE for subjecting his area to constant loadshedding. "KE CEO threatens me, if I speak too much [against the power company], the power supply to my area will remain suspended," she alleged. She recommended the entry of other companies in the power distribution sector in the pattern of cellular companies operating in the country to ensure a competitive environment.

Hafiz Naeem Ur Rehman on this occasion said KE's performance in all three sectors - Generation, Transmission and Distribution - has remained very poor. It has improved its profitability by sending inflated bills to the poor consumers during the last 15 years. He said the modification in the KE's distribution license is the need of hour to end its monopoly. The power company has been taking meter rent, bank charges, TV fee etc. KE has to pay back billions of rupees to the consumers under claw back mechanism. The city continues to witness power outages as it receives the very first drop of rain. Citizens have to face loadshedding even in winters. You are operating in Karachi, you should manage accordingly.

MQM-Pakistan leader Khawaja Izharul Hassan said the Sindh Assembly has already adopted a resolution with a unanimous vote stating that there should be other companies besides the KE to distribute electricity in the city. "I have the honour to present the resolution," he said. He alleged the company has fired around 4000 workers after it was privatized. Industrial consumers paid more than Rs1.5 billion in fines as well.

"Some foreign companies including from China are interested in investing in Karachi's power sector," Izhar said while talking to media after the hearing.

Representatives from Indus Hospital, and LRBT - an NGO - which attended the hearing via zoom, and Ex-UC-42 Chairman Machar Colony Muhibullah spoke in favour of KE on this occasion, however they did not object Nepra's proposed APM in KE's distribution license.

Pakistan Apparel Forum Chairman Javed Bilwani also attended the meeting through video link. He appeared on the screen for a half of minute requesting the Nepra officials to listen his stance saying he represents the value-added sector which earns plenty of foreign exchange to the country. But the Nepra officials paid no heed to his words.

Copyright Business Recorder, 2020