Utility getting ready to operate in competitive environment: KE has applied for ‘non-exclusive’ distribution licence: CEO

KARACHI: After enjoying status of the sole ‘vertically integrated’ power company for more than 100 years, K-Electric (formerly the Karachi Electric Supply Company Ltd) has decided in principle to gear up for operating in a competitive environment and has approached the National Electric Power Regulatory Authority (Nepra) for a ‘non-exclusive’ distribution licence.

The KE’s ‘exclusivity’ is going to end in June this year. Unbundling of its distribution system, if carried out, will end its monopoly in Karachi – the country’s largest city and its commercial hub — as other market players may obtain distribution licences from the regulator.

The KE itself desires to operate in a competitive environment rather than having a monopolistic distribution licence.

K-Electric’s Chief Executive Officer Syed Moonis Abdullah Alvi, while addressing the Future Summit on Wednesday, said: “We have filed a petition with the regulator in December 2022 for a non-exclusive distribution licence. It’s definitely not our desire to have exclusivity, but at the same time we want a level playing field.”

KE’s exclusivity will end next year: Nepra

“KE has served Karachi for 110 years,” he said. “We are struggling to shift (emphasis) from consumer to customer. Probably, the biggest relief for the energy sector in Pakistan would be liberalisation. Some positive disruption is perhaps advisable. If some disruption is not done, probably we will be disrupted completely.”

He pointed out that KE has monopoly in generation, distribution and transmission, but it works in a regulatory framework. It is not in a position to set its own power tariff. It is the Nepra that sets tariff for KE and other discos operating in the country.

“We don’t enjoy this monopolistic situation. We are getting too much less than decent,” Moonis Alvi said. He said the power sector’s circular debt has topped Rs3 trillion, excluding the oil and gas sector’s circular debt which is around Rs600 billion. This constitutes 40-45 percent of the total national budget.

He said that KE has no role in increasing the circular debt. Rather, he claimed that KE has to receive Rs130 billion from the federal government.

The company suffered a loss of Rs16 billion in the first quarter of this financial year. He said that KE is a private sector company, so it will have to cover this loss from its own resources. On the other hand, the deficit of government discos adds to circular debt.

He said that 40 percent of Karachi has been converted into slums and most of the people living in such areas are undocumented.

Many of the people living in such areas cannot afford to pay for electricity. “They should be given targeted subsidy and for this help can be taken from the Nadra data,” he said.

The KE’s CEO said: “We must ensure that power generation is transitioned to indigenous fuel. It is not in our interest to buy expensive imported fuel.”

He said Nepra is working towards liberalisation in the energy sector, but it should ensure a level playing field for all. He said that before the upcoming summer season, KE will have an additional 900 megawatts of electricity available. He vowed to add 30 percent of power from alternative sources to the KE system by 2030. The KE has signed an agreement with the China Three Gorges Corporation for cheap electricity.

It is relevant to mention here that KE recently filed with Nepra a robust investment plan for the 2024-2030 period amounting to Rs484 billion for transmission and distribution segments.

Meanwhile, the sixth edition of the two-day Future Summit-2023 has been organised by the Nutshell Group.

Copyright Business Recorder, 2023