Security deposits of Discos and KE: FPCCI, KATI up in arms over proposed increase

ISLAMABAD: The Federation of Pakistan Chamber of Commerce and Industry (FPCCI) and Korangi Association of Trade and Industry are up in arms against the proposed increase in security deposits of Discos and K-Electric.

Both Associations have written separate letters to Registrar NEPRA, requesting provision audited details of total security deposits held by Discos and K-Electric before a public hearing on this issue scheduled for February 11, 2025.

They are of the view that as consumer representatives, it is crucial for us to have access to this information to participate meaningfully in the upcoming hearings regarding tariff structures, financial management, and consumer rights.

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According to the letters, it has come to their attention that Discos and K-Electric have collected security deposits equivalent to approximately four times the maximum demand and seven times the average demand of consumers.

However, there is a lack of transparency regarding how these funds are utilized. Given the substantial amounts involved, trade bodies request that NEPRA should provide the following details in an audited format for each DISCO and K-Electric: (i) The total amount of security deposits collected as of the most recent audited financial statement;(ii) a detailed breakdown of how these funds are being used or invested by each entity;(iii) any interest earned on these security deposits and whether these benefits are passed on to consumers.

To ensure complete financial transparency in Discos’ operations, FPCCI and KATI have also requested that NEPRA should direct all Discos and K-Electric to provide the following audited details: (i) Audited Financial Reports of Grid Sharing Charges- (a) Discos must disclose audited accounts for Security Deposits recovered , including how these charges are determined, applied, and utilized ; and (b) a clear breakdown of revenue collected under grid-sharing charges should be made available.

A detailed report on the asset base of each Disco, including valuation, depreciation schedules, and investments made in network expansion and maintenance. This data should align with tariff petitions and justify the claimed financial requirements of DISCOs.

NEPRA has been requested that a transparent breakdown of dedicated distribution systems funded by individual consumers versus those built as part of the common distribution network be provided. Any discrepancies in asset ownership and cost recovery mechanisms should be clearly addressed.

Both Bodies have requested NEPRA to ensure the availability of this information at the earliest so that all stakeholders, including consumer associations, can make informed contributions to the upcoming hearing.

“If this crucial data is not provided, it will undermine the credibility of the regulatory process, as Discos and K-Electric already have access to this information while consumer representatives do not. Therefore, conducting a hearing on this subject without this data will be futile,” President FPCCI, Atif Ikram Sheikh, requesting NEPRA postpone the hearing until this information is fully accessible to consumers and industrial associations.

The business community has also asked NEPRA to publish this data on its website when available to maintain transparency and regulatory integrity.

Several other Associations have also sent their reservations on the proposed increase security deposits by Discos and K-Electric.

Copyright Business Recorder, 2025