THE allegations made by State Minister for Water and Power Abid Sher Ali are baseless. The minister should first get the understanding of tariff before making preposterous claims and negatively affecting the company’s good image.

The claim that KE received Rs312 billion from the federal government on account of subsidy is false.

The minister seems confused about the issue of applicable consumer tariff and determined tariff. If the government continues to pass on electricity to the consumer at the applicable consumer tariff which is significantly lower than the determined tariff, then the amount of tariff differential claim will always exist, i.e. subsidy to the end-consumer of electricity.

There was no benefit whatsoever passed on to the utility in terms of tariff differential claim or subsidy as it was passed on straight to the consumers at the government’s own request (applicable consumer tariff).

Moreover, the government owes KE a total of Rs112.50 billion, including tariff differential claims, GST refunds and unpaid power bills against various federal and provincial departments and bodies. Even if the government decided to adjust its dues against the current liabilities, the government would still have to pay a net outstanding amount of Rs 30 billion to KE, which was skipped from the details of circular debt as provided by the federal ministry of finance.

The privatisation of KE took place in accordance with all applicable laws, and all relevant approvals were in place from the ECC, Cabinet and CCI. The new management/shareholders have invested over $1 billion in the form of equity and debt in the company and added almost 1010 MW into the system, thus improving the generation, transmission and distribution network.

Spokesperson

K-Electric Karachi

Published in Dawn, October 24th, 2014