April 27, 2008	Sunday	Rabi-us-Sani 20, 1429

KARACHI, April 26: Has Karachi Electric Supply Company started recovering enhanced fuel adjustment charge from its customers without giving a formal notice? This question is being raised by the industrial consumers, who report 84 per cent increase in fuel adjustment charge of the March bill given by the utility.

Site Association of Industry Chairman Nisar Shekhani has complained that his factory’s March bill shows 84 per cent increase. A few other friends had also complained about the enhanced electricity bills, he said. Even those factories, which are not working or operating at low capacity, are reported to have received bills of a certain ratio of their installed loads.

“I am gathering facts about these bills from Site area and other industrial zones of the city,” Mr Shekhani said.

In March, the KESC was stopped abruptly of power supply by Pepco on the plea that it was not paying bills according to a verdict given by National Electric and Power Regulatory Authority, on the basis of which it claimed Rs34 billion.

Nepra, according to the KESC’s six monthly interim report, determined National Transmission and Dispatch Company’s tariff on marginal cost basis effective from July 2004. The KESC took a stand that average tariff for the utility should be the same as being applied to other electric power distribution companies in Lahore, Faisalabad and other places.But in its six-monthly report the KESC management expresses confidence of being spared from any financial burden as Nepra’s decision about the additional tariff and accumulated recoverable are pass through.

Either, it will be a pass through and charged to consumers or else be paid by the government as a subsidy.

Knowledgeable sources say that the government is already hard pressed and as Finance Minister Ishaq Dar indicated that the budget deficit may go up to 9.5 per cent, which the government is trying to contain to 6 per cent. The subsidy burden in the budget is said to be more than Rs235 billion and there was no option but to pass on the additional burden to the consumers.

In KESC, senior officers estimate an average burden of additional tariff to Rs11,500 per customer. “But it will vary with the category of consumers,” a senior officer said. “More the electricity use, the greater will be the impact on consumer’s bill,” he explained. Those consumers, who are using up to 50 units, will be spared of additional tariff.

A conversation with senior people in KESC conveys one message very loudly and clearly. The message is that KESC wants to get electricity from Wapda system because about 40 per cent of its electricity comes from hydel source, which is cheap.

“Wapda considers Hubco a millstone around its neck and wanted to transfer this entire burden on KESC,” indicated a senior officer, who said that even after privatisation, the KESC has a claim on hydel power projects in North as people of Karachi have contributed most in debt servicing of those loans obtained for these dams.

“If the government wants KESC to be dependent on its own generation based on furnace oil then it will have to take a decision of allowing it to pay only the landed cost’’ the officer asserted.

A loud thinking among the new investors is said to be converting KESC into companies, one for power generation and other for transmission and distribution. Sources close to new investors say that such a decision will bring an end to KESC monopoly and encourage more investors to come in the field.