Nepra not happy with performance of Qesco

National Electric Power Regulatory Authority (Nepra) on Wednesday expressed disappointment at the pathetic performance of Quetta Electric Supply Company (Qesco), suggesting that the company should consider off-grid solutions or be wound up for consistently being a loss making entity.

These observations came from a two-member Nepra team comprising Saif Ullah Chatha and Rafique Ahmed Shaikh. Nepra's technical and finance team headed by Sajid Akram presented the case and provided some clarifications.

The officials of Qesco presented cases of new power distribution tariff rates for 2018-19 and 2019-20 and sought an increase of about Rs 6/kWh in tariff for the period 2018-19 and 2019-20,i.e, from Rs 16.75 per unit in 2017-18 to Rs 18.61/kWh to recover Rs 88.919 billion in 2018-19 and Rs 22.35/kWh for 2019-20. The Disco has also sought Rs 1.739 billion as Prior Year Adjustment (PYA), in addition to Rs 12.777 billion (Rs 2.67/kWh) as distribution cost for control period of 2018-19.

The Authority expressed annoyance at the performance of the Disco, when the Manager Finance stated that the company cannot achieve the T&D losses target due to lengthy and scattered 11KV feeders as majority of the consumers are at the tail end of the power sources. Nepra had allowed 17.50 percent T&D losses against requested benchmark of 22.70 percent (a difference of 5.20 percent) in 2019-20 against 23.4 percent fixed for 2018-19. Qesco team argued that 2.70 percent was requested on the basis of third party study. Nepra was also apprised that the company is unable to reduce losses of over 1 percent.

He further revealed that the company's recovery stood just at 30 percent due to which it cannot invest too much on improvements of its system. However, he claimed if the governments (federal and provincial) pay the outstanding receivables, recovery can reach 80 percent.

According to Qesco officials, the total number of consumers are 633,022 of which 467243 (73.81 per cent) are domestic followed by 121,154 (19.14 per cent) commercial, 3539 (0.56 per cent) industrial, 29405 (4.65 percent) agriculture, 2199( 0.35 per cent) federal government and 9402 (1.50 per cent) provincial government. However, agri consumers who consume 73.95 percent of total available electricity constitute 88.62 per cent of total receivables of Rs 319.456 billion.

The company's power purchase price will be 82.010 billion in 2019-20 as compared to Rs 74.902 billion in 2018-19. The company maximum demand is 1,820MW whereas its allocation is 1,463MW. However, the company's drawl is just 966MW. The main reasons for lower drawl are: (i) policy of load shedding on the basis of AT&C losses and (ii) 132 KV and 1 KV system constraints. Disco maintains that huge investment is required to remove constraints.

The company's financial loss was Rs 27.224 billion in 2018 and is projected to be 36.831 billion in 2019. Qesco's official said the agriculture consumers' who are supposed to pay Rs 10,000 per month as per agreement are not even paying Rs 6000 per month. Likewise the remaining amount of bill is shared by the provincial government and federal government at 60 per cent and 40 percent respectively. However, majority of agriculture consumers do not even pay Rs 6000 per month.

Disappointed with the statistics presented by the Qesco team, Member Sindh, Rafique Ahmed Shaikh asserted that if a shop is in loss like Qesco, it is better to shut it down. Member Punjab, Saif Ullah Chatcha stated that since there are huge losses in Balochistan and the company is seeking to fix tariff at Rs 22.35 per unit for 2019-20, with the recovery of just 30 percent, the remaining amount will be paid by consumers of other Discos. He suggested that the company should think about solutions and set up solar plants near the villages so that losses are reduced. Saif Ullah Chatha also urged Qesco officials to think of out of the box solutions to resolve the company's problems.

The official of Qesco noted that the provincial government is considering the proposal of off-grid solution but did not share details with the Authority.

The Authority also directed Qesco team to submit a comparative statement of the impact of previous investment on its power distribution system and future estimates of improvement in the system.