Power tariff goes up by 85 paisa

— File Photo

ISLAMABAD, Oct 11: Amid legal and financial irregularities pointed out by one of its members, the National Electric Power Regulatory Authority (Nepra) notified on Thursday an 85 paisa per unit increase in the electricity tariff.

According to a Nepra notification, the tariff was increased for additional fuel-based cost for July and ordered its recovery in the bill for January 2013.

In a dissenting note, Nepra’s member from Khyber Pakhtunkhwa Shaukat Ali Kundi said “serious inefficiencies prevailing in the public sector generation companies” pointed out by Nepra in Aug 2011 still persisted, hence there was no legal justification to burden consumers with the cost of inefficiencies of government and power companies for no crime on consumers’ part.

“These inefficiencies still persist and GENCOs are still generating electricity at much higher cost, thereby burdening end-consumers for no fault on their part,” said Mr Kundi and added that the inefficiencies were adding to the misery of consumers and pushing the power sector into a quagmire.

He said the inefficiencies included non-adherence to the merit order of GENCOs’ power plants in time, failure to carry out scheduled maintenance and non-replacement of damaged parts in time.

At the same time, the plants were operated on higher auxiliary consumption at very low efficiency and heat rates and non-installation of fuel flow meters and failure to carry out dependable capacity and heat rate tests.

He raised questions over legality of generation tariff and licences some of whom had expired many years ago.

The shortcomings included non-filing of fresh tariff petition for generation tariff on the basis of test results, non-carrying out of an in-house study to find out reasons for higher auxiliary consumptions, non-installation of Chromatographs meter at incoming source of the gas in power plants.

He said the useful lives of most of GENCOs generation plants had expired as per their generation licences issued to them by Nepra, but those were still being operated.

These plants include two units at Kotri power plant of Jamshoro Power Company, three units at Faisalabad, and eight units of Northern Power Generation Company.

“In my view, in the absence of rehabilitation and replacement and due diligence of power plants; useful life thereof in terms of their licences has expired, the generation of electricity from these inefficient and outdated power plants is not only unlawful but also against the public interest,” Mr Kundi said.

He said that generation and distribution companies and central power purchase agency were directed time and again by Nepra to execute energy sale agreements (ESAs) which were very crucial and important documents because commercial relationship for sale and purchase of power and mutual rights and obligations between CPPA and DISCOs and GENCOs was to be determined through the agreements.

“Regrettably, CPPA, DISCOs and GENCOs have either ignored or simply failed to comply with the directions of the authority.

The non-signing of ESAs gives rise to speculation that the financial transactions between CPPA, GENCOs and DISCOs are being carried out in a disorderly manner and without any financial discipline”.

He said the business of sale and purchase without a formal written ESA, between three different sets of companies having been registered under the Companies Ordinance, 1984, having different objectives and governed by different board of directors “is a serious matter which could lead into grave complications and likely to result in some serious audit objections about misappropriation of public money and also will not stand the test of investigative scrutiny at any form or stage”.

He said that a recent audit of CPPA by Nepra revealed that cost of energy provided by some GENCOs was booked on estimated basis and no verification was being done at CPPA level about invoices raised by the companies.

“The procedure used for processing of invoices is not thorough and diligent. The practice of not resorting to source documents, i.e. tariff determination of Nepra was common and not taken seriously” and hence the tariff adjustment was unfair and unjustifiable”.

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