K-Electric slammed for meagre 16 paise refund

ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) on Thursday sounded disquiet over recent and ongoing renegotiations with certain independent power producers (IPPs) for tariff cuts and premature termination of contracts, fearing its negative impact on the investment climate.
While two Nepra members — Rafique A. Shaikh from Sindh and Amina Ahmed from Punjab — shared similar views, the business, trade and political representatives from Karachi raised questions over a 16-paisa per unit negative adjustment in fuel costs for electricity consumed in September, saying this would put their business and commercial activities at a disadvantage against the rest of the country.
At the public hearing on KE’s petition for a 16-paisa per unit refund to its consumers with a net fiscal impact of Rs247 million, the consumer representatives said the ex-Wapda distribution companies (Discos) had sought 71 paise per unit negative FCA. This would mean the electricity costs for businesses and consumers in Karachi would be 55 paise per unit higher than in other parts of the country.
The representatives of KE told the public hearing, presided over by member Sindh Rafique Shaikh, that electricity consumption in Karachi had dropped by 6pc in September compared to last year. The industrial consumption fell by 12pc compared to 3pc last year.
The KE team attributed the shrinking industrial consumption to overall economic conditions. They disclosed that the government was working on a winter package to incentivise incremental consumption through lower rates, which, coupled with declining interest rates, would boost industrial and economic activities.
Some of the commentators and interveners raised questions over different policies for Karachi and the rest of the country and as to why some of the KE’s 40-year-old plants were being given further extensions and dollar-indexed returns while the federal government was terminating IPP’s contracts before their term or shifting their return payments in rupee or fixing at a specific exchange rate.
Nepra’s Member Law Amina Ahmed said there was no difference between one side and the other. She said there was no information on the table yet about renegotiations with IPPs. “We are also reading these things in newspapers,” she said, adding: “It is not fair to open all the tariffs; it is not done like this.” On another occasion, she said: “Do we want to throw all investors out of the country? We need to see the ground realities.”
Member Technical Rafique Shaikh also observed that some decisions were unwarranted. The sanctity of contracts is very important, he said and advised the participants to remain focused on the subject instead of raising political questions because regulatory hearings were live-streamed and watched outside the country. “We should not create doubts and trust deficits.”
Published in Dawn, November 1st, 2024