ISLAMABAD: K-Electric’s seven year (2024-2030) investment plan of Rs 484 billion for transmission and distribution segments drew heavy criticism at a public hearing in National Electric Power Regulatory Authority (Nepra) on Wednesday.
Starting from Nepra Authority Chairman Tauseef H Farooqi, Member Sindh Rafique Ahmad Shaikh, Member KP Maqsood Anwar Khan and Member Balochistan Mathar Niaz Rana, Planning Commission and interveners from Karachi raised a number of questions on the investment plan and floated different proposals for system improvement. However, some of the interveners also appreciated power utility company for taking measures to improve transmission and distribution systems and bring down losses.
KE’s team comprising Chief Executive Officer (CEO), Moonis Abdullah Alvi, CFO Aamir Ghaziani and heads of distribution, transmission and consumer affairs briefed the Authority on envisaged Multi Year (seven year) investment plan, to be reviewed in June every year, subject to approval by the Regulator.
KE to invest Rs484bn in Transmission & Distribution FY 2024-2030
KE’s new plan envisages investing Rs 484 billion in the transmission and distribution business with a keen eye on projected growth in power demand, loss reduction initiatives, targeted and technology driven investments in the network for improved reliability and safety, as well as, initiatives to enable KE off-take additional power from external sources including the National Grid.
The goal at the end is to make power affordable, safe, reliable, and smooth. At the same time, it seeks to invest in climate resilient and environmentally sustainable infrastructure for power supply.
The Authority was informed that implementation on investment plan will commence from July 1, 2023 and continue till June 30, 2030. The power utility has not claimed exclusivity after expiry of its existing licence expiring on June 30, 2023.
Of Rs 484 billion investment plan, Rs 280.915billion are envisaged for improvement in transmission system, Rs 184.650 billion on distribution system, Rs 18.514 billion for system support. The power utility company intends to reduce its losses by 2 per cent with new investment seven years.
The plan has been tailored on assumptions of Rs 206/ USD, Pak CPI (average, 158.48 US CPI (avg) 282.03. The capex will be exclusive of dedicated consumer funded capex. Investment has been worked out in PKR but it is based on dollar components. In transmission dollar component is 90 per cent whereas in distribution 70 per cent.
“Macro-economic assumptions and uncontrollable factors are main basis for CPEX and investment plan will be updated on actual,” said Ghaziani.
The Authority sought previous MYT of KE aimed at comparing it with the new plan before taking any decision on proposed investment plan.
KE claims that since privatisation it has halved its T&D losses, doubled its customer base and power consumption. This was possible due to sustained investments totalling Rs 474 billion across the value chain.
As per NEPRA State of Industry Report, since its privatization in 2005, KE is the most improved distribution company in terms of loss reduction. The new investment plan is designed to further the operational improvements and is aligned with KE’s vision to keep customer’s interests and needs at the core of the company’s business operations.
The previous MYT was an integrated model that together clubbed generation, transmission, and distribution as an integrated model. As the market transforms into an open ecosystem, K-E looks forward to working in this environment to bring the best of their services for their customers.
Nepra Tariff team leader, Sajid Akram expressed disagreement with some of the assumptions of PKR/ USD rate, saying that the power utility company did not make investment from fresh equity as per commitment.
Chairman remarked that with current position of Rupee, what kind of crystal ball is available to give accurate assumptions for the next seven years, adding that the power utility will be given prudent cost against some service delivery.
The Authority did not agree to GDP projections of KE as it was not based on international assumptions.
Chairman Nepra further stated investment allowed in the past is not translated into on ground improvements, saying that he has done “dirty analysis” of new proposed 13 grid stations, which should give growth of 18 per cent but the power utility company is projecting electricity growth of 1.4 per cent.
Chief Jamaat-e-Islami (JI) Karachi, Hafiz Naeemur Rehman rejected investment plan of KE and urged the Regulator to throw it in dustbin. He appreciated Discos’ performance and suggested that the government should takeover KE.
Chairman Nepra sarcastically advised him to buy KE and run it better if he is not happy with its performance.
Tanveer Barry representative from Karachi chamber said that according to Nepra state of industry report KE power plants are generating expensive electricity and some plants have completed their life. He queried that as KE did not submit future planning for generation, what is the likely electricity tariff forecast of KE power plants or Karachi consumers for another seven years.
Regarding load shedding, Barry said that KE should change its policy instead of shutting down feeders and take action against defaulters and those involved in theft. He maintained that KE did not submit any plan regarding wind energy and to produce electricity from waste and also to get electricity from Thar coal power plant
Chairman Nepra also expressed disagreement with Asad Ali Shah’s viewpoint with regard to KE’s affairs, saying that his letter is being reviewed by the SECP.
Former Managing Director Pakistan Stock Exchange, Moin Fuda, appreciated KE’s performance and requested Nepra to help payment of Rs 400 billion receivables from government so that the power utility company could invest as per the investment plan.
Arif Bilwani raised several questions on proposed investment plan of KE. Some other interveners also questioned performance of power utility company.
Copyright Business Recorder, 2023