Power Distribution Companies (Discos) have deposited Rs 52 billion in the accounts of Central Power Purchasing Agency (CPPA) with a view to capping circular debt at Rs 300 billion as per certain conditions of International Monetary Fund (IMF). This was revealed at a public hearing on a petition of Islamabad Electric Supply Company (Iesco) for a multi-year tariff held in the Nepra headquarters. Chairman Nepra Brigadier Tariq Sadozai(retired) presided over the hearing.
According to Iesco authorities, on the order of Ministry of Water and Power, an amount of Rs 10 billion profit has been transferred into the account of CPPA guaranteed despite the fact payment of electricity purchased by CPPA from IESCO had already been made. During the hearing, former member Energy Planning Commission Shahid Sattar informed the forum that as per order of Ministry of Water and Power, Discos deposited an average of Rs 52 billion in the account of CPPA to cap circular debt at Rs 300 billion. The Chairman Nepra asked Nepra, Iesco and CPPA authorities that copy of directive issued by the Ministry of Water and Power be submitted in Nepra.
The Chairman Nepra observed that Discos do not have transformers and meters and money of distribution margin has been deposited in CPPA account. Payment was made to IPPs from extra recovery of Discos. Discos are only bound to pay the amount of electricity purchased from CPPA. Nepra has reserved determination on request of Iesco to increase tariff by 50 paisa per unit to Rs 2 per unit under multi-year tariff, a condition set by the lenders.
The Chairman Nepra Tariq Sadozai while expressing his concern said Iesco is a profitable company but in Rawalpindi cables' condition is very poor. Iesco will spend Rs 70 billion to overcome its losses in five years. After spending Rs 70 billion, the losses would be reduced by 0.8 per cent. According to Iesco authorities under a five-year tariff, other than application for increase of 50 paisas to Rs 2 per unit, Iesco also submitted an application of Multi-Year Tariff for privatisation.
Chairman Nepra observed that that Iesco Board of Directors held twelve meeting and directors of Ministry of Water and Power only attended three meetings which implies that the Disco is not taking any interest. In another hearing, K-Electric was allowed to increase tariff by 54 paisa per unit for October 2015 under fuel adjustment mechanism. K-E will recover Rs 851.9 million from its consumers in January 2016. K-E official informed Nepra that the rate of electricity purchased from CPPA was Rs 1.93 per unit costlier than the previous rates.
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