NJHPP shutdown, Kanupp debt re-profiling: Consumers deprived of Rs60bn benefit: Nepra

ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) on Wednesday said the projected financial benefit of Rs 60 billion has not been passed on to the consumers of Discos and K-Electric (KE) due to closure of 969 MW Neelum Jhelum Hydropower Project (NJHPP) and debt re-profiling of Karachi Nuclear Power Plant-2 (Kanupp)

“There was under recovery of Rs 60 billion during the first quarter of current fiscal year due to closure of NJHPP which produces cheap electricity and debt re-profiling of the Kanupp and in case of neither event taking effect, Rs 60 billion would have been passed on to the consumers as per projected generation during this period, “said Nepra official during a public hearing on adjustment of QTA for first quarter of CFY (2024-25).

Initially, Discos had sought positive adjustment of Rs 8.71 billion in QTA for the first quarter, which has been revised down to Rs 6.477 billion.

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However, CPPA-G and Nepra rejected the figures of Discos saying that the actual financial impact of QTA is Rs 1.36 billion and if this impact is passed on to the consumers in two months, then its impact will be paisa 13 per unit and in case of three months, it will have impact of Paisa 9 per unit. However, since the impact of Rs 1.74 per unit of last quarter of 2023-24 will be done away with, the impact of QTA will be in negative.

Discos and KE came under criticism for unleashing unscheduled load shedding in their respective areas to show reduced losses.

The Authority was informed that the sale of electricity of Discos recorded average negative growth of 10.85 per cent during the first quarter, of which FESCO showed negative growth of 14.48 per cent, MEPCO 15.78 percent, PESCO 14.47 per cent and Qesco 19 per cent.

The representative off FESCO claimed that 50 per cent sale has declined in agriculture sector due to massive solarization whereas 58 per cent reduction has been witnessed in industry specially in B-3 category. He added that small industry is guardedly shifting toward solarization.

The representative of Mepco also shared the same argument saying that the company’s sale has shown substantial reduction due mainly to the majority of agriculture tubewells shifting to solar systems.

Member, Law, Ameena Ahmed stated that shifting on solar systems is an ongoing process, and questioned if any study was available on the impact of solarization.

Maqsood Anwar Khan, Member KPK argued that Discos are unleashing unscheduled management to show less losses in their areas of jurisdiction.

On questions raised during the public hearing, Rafique Ahmad Shaikh, (Member Technical) said, his personal viewpoint is that the only solution to Discos is to privatise them or to put them on public Private mode.

“Discos cannot be run on the existing mode whatever the government does. Discos Boards must be given complete autonomy and divide the Discos in small companies,” he added. Data of off-grid solarization is also not available.

Imtiaz Baloch, Director General (Licencing) informed the Authority about massive solarization on demand of electricity from Discos, but proposed that Discos should compile comprehensive data on solarization.

The representative of CPPA-G clarified that power consumption increased by 7 per cent in October and will further increase in the months to come after implementation of the Winter Package which is subsidy neutral.

He further stated that circular debt growth was Rs 73 billion during first quarter of 2024-25 against Rs 243 billion in the comparable period the year before due to better performance of entire system.

He said, circular debt growth was just Rs 11 billion during the first four months of current fiscal year as compared Rs 301 billion during the corresponding months of 2023-24. The General Manager (tariff) KE, Ghufran Ahmed stated that there is also an impact of solarization but the net impact is almost zero due to increase in demand.

Amir Sheikh, one of the commentators, proposed that Nepra should defer impact of QTA of first quarter of 2024-25 for the next quarter so that industry could benefit from abolition of Rs 1.74 per unit.

Arif Bilwani, raised a number issues related to KE including write-offs, unscheduled load shedding and sought new mechanism for implementation of winter package. He sought Nepra’s role to sort out issues with the KE.

Copyright Business Recorder, 2024