ISLAMABAD: The National Electric Power Regulatory Authority (Nepra), on Wednesday, reserved its determination for a uniform increase in base tariff of up to Rs7.12 per unit fixing it to Rs35.50 per unit for 2024-25 from 29.78 per unit of FY 2023-27 at an exchange rate of Rs300/$, amid calls of revision in pacts with the IPPs and revelation of the government’s plan to legalise revenue–based load shedding.
This was the crux of the public hearing which continued for three hours on the government’s motion, meanT to get approval of the new Schedule of Tariff (SoT) for Discos and K-Electric for 2024-25 along with an addendum to keep tariffs of protected and non-protected categories of domestic consumers, using up to 200 units at the level of existing tariff for next three months starting from July 2024 after adjustment of Rs50 billion subsidy approved by the federal government from PSDP 2024-25.
K-Electric seeks Rs10.69/unit hike in base tariff for 7 years
The NEPRA has also started investigation into overbilling by the Discos, after retrieving 60 date from PITC which deals with the billing of Discos. The NEPRA is expected to unveil its findings next week.
The authority comprising Chairman Nepra Waseem Mukhtar, Member (Technical) Sindh Rafique Ahmad Shaikh, Member (Tariff and Finance) Mathar Niaz Rana, Member KPK Maqsood Anwar Khan, and Member (Law) Amina Ahmed officiated a hearing in this regard.
The presentation given by the CPPA-G indicates that rebasing has assumed on the projections of received 120 billion units, sold units 106 billion, T&D losses 11.43 per cent, rupee–dollar parity Rs300, energy charges 10.94 per unit, capacity charges 18.39 per unit and use of system charges (UoSC), Rs1.54 per unit. This shows generation cost will be Rs30.88 per unit to recover Rs3.278 trillion from Rs26.02 per unit of last year, which was meant to recover Rs2.866 trillion. The government will also recover the distribution margin of Rs3.68 per unit, and Prior Year Adjustments of Rs0.94 per unit.
The total financial impact of these adjustments will be of Rs3.768 trillion for FY 2024-25 at the base tariff of Rs35.50 per unit.
Of Rs3.768 trillion total envisaged revenue Rs1.161 trillion will be energy cost, whereas, Rs2.116 trillion will be capacity charges. The new base tariff has been assumed on the basis of reduction in consumption by three per cent during 2024-25 despite the fact that 11 per cent decline consumption has been recorded in May 2024.
Member (Tariff and Finance) Mathar Niaz Rana was of the view that there is a need to look into generation side, insurance and other factors of fuel to bring the tariff down, adding that the concerns of the consumers are genuine.
“[The] elephant in the room is generation. Has [the] Power Division inquire that if the generation is efficient or not. Whenever we raise the issue, it is stated that Discos are not performing well. Yes, Discos have their issues, but our generation plants like IPPs are operating? If their generation is as efficient as the same plants in the region or any other country. I feel, there is a need to look into that factor to bring improvement,” Rana added.
The Power Division said that it is a very valid concern that is why it was stated that the Prime Minister’s Reform Action Plan which is being monitored very vigilantly is viewing all the aspects of generation, transmission and distribution to remove bottlenecks.
“We are negotiating on the conversion of imported coal-fired Jamshoro power plant on local coal. Likewise, the conversion of imported coal power plants is under discussion at the highest level. Negotiations on outstanding debts are also under progress with the plants. However, all fruits of all these proposed measures will be seen in the short to medium term i.e. two to three years,” said Mehfooz Bhatti, joint secretary (Power Finance).
The NEPRA chairman explained that the government has earmarked a subsidy of Rs490 billion of which Rs313 billion was meant for the Discos consumers while Rs177 billion is for KE’s domestic consumers using upto 300 units.
Waseem Mukhtar, chairman NEPRA who on the one hand grilled Power Division and CPPA-G for their inefficiencies due to which NEPRA has to face criticism, but on the other he explained that though an increase in base tariff will be Rs7.12 per unit but in fact, its real effective tariff will be Rs3.37 per unit in August as two QTAs of Rs2.75 per unit and 1.91 per unit will be replaced with Rs0.91 per unit.
He, however, was of the view that there should be “reward and punishment” in the government saying that the concern will paying consumers about no action against non-paying consumers. The NEPRA gave tariff on the basis of 100 per cent and Discos are not heading towards betterment as this number is constant since years.
“When cost will increase from July, will recovery increase or decrease,” the NEPRA chief, enquired Power Division’s team led by Mehfooz Bhatti, joint secretary (Power Finance). He was of the considered opinion that there would be a drop in recovery.
The chairman said that public concern is genuine about the state of the power sector, saying that the Power Division has to take drastic steps to bring improvement. He said there should be a system of punishment and reward.
“We face criticism, whereas, inefficiency is parked somewhere else,” the NEPRA chairman added.
K-Electric’s Director Finance Ayaz Jaffar said that in rebasing determination Late Payment Surcharge (LPS) mechanism has also been altered. He said, multiple stakeholders including banks are party to it, which requires time to change their billing cycle. He sought three or four months to streamline the new LPS mechanism. The KE has also sought two months to implement load management on the PTM’s instead of the feeder base.
Copyright Business Recorder, 2024
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