Alert Sign Dear reader, online ads enable us to deliver the journalism you value. Please support us by taking a moment to turn off Adblock on Dawn.com.

Alert Sign Dear reader, please upgrade to the latest version of IE to have a better reading experience

.
KE officials argue the new tariff does not cover the costs and ignores genuine recovery issues which will lead the power utility into cash flow shortfalls with serious implications for the company and its consumers.—White Star
KE officials argue the new tariff does not cover the costs and ignores genuine recovery issues which will lead the power utility into cash flow shortfalls with serious implications for the company and its consumers.—White Star

KARACHI: Amid noisy scenes and chanting of slogans, the first day of National Electric Power Regulatory Authority’s (Nepra) hearing on a review petition for K-Electric’s multi-year tariff (MYT) kicked off on Thursday.

Nepra’s complete bench — comprising Chairman Brigadier (retired) Tariq Saddozai, member Balochistan Major (retired) Haroon Rashid, member Khyber Pakhtunkhwa Himayatullah Khan, member Punjab and vice chairman Saifullah Chattha and member Sindh Syed Masood ul Hassan Naqvi — was present on the occasion.

Jamaat-i-Islami (JI) packed the hall with protesters who at times resorted to raising slogans against the utility for overbilling.

At the multi-year tariff hearing, the power utility faces stiff criticism for excessive billing

The hearing began with the concerns raised by intervenors.

Karachi Chamber of Commerce and Industry’s Dr Qazi Ahmed Kamal said KE should install new generating units with higher efficiency. “They should be more than 60 per cent efficient,” he stressed.

He added that time-of-use or TOU meters should be installed at all factories and commercial houses as was decided in 2011.

Arif Bilwani, a local businessman, said the heat rate of the KE generating units was calibrated in 2012 and since then it has not been checked. “We do not know how much advantage KE is taking in this sector,” he commented.

Taking the example of the highly efficient Haveli Bahadur Shah Plant installed by the Punjab government, he said the tariff can be reduced.

He said Nepra should ask KE to install better generating units with higher efficiency which will help reduce electricity tariff.

Ameer JI Hafiz Naeem ur Rehman said KE is sending excessive bills to consumers for which the party had to set up a public aid committee. Hundreds of consumers are complaining about bogus billing, he commented.

He went on to add that the power utility carried out loadshedding on a high scale in poor localities. “Loadshedding by KE should be done on an even basis,” he said.

Pasban’s Abu-Bakr Usman pointed out that a change in KE’s slab system was made without any public hearing. “It was done through a government notification. Nepra should rectify the same because it is illegal and should call a hearing on the subject,” he said.

During the second half, KE presented its review motion in response to Nepra’s MYT determination.

The Abraaj Group’s Partner and Head of Asia Omar Lodhi said, “The performance-based tariff structure enabled KE to invest over Rs130 billion in the power infrastructure of Karachi since 2009. KE has to date not paid out any dividend and the profits declared in annual audited accounts have been re-invested into the business.”

He claimed that this in turn has benefited power consumers through improvement in supply and quality of service. “However, the determined tariff 2017 does not cover the costs and ignores genuine recovery issues, leading KE into serious cash flow shortfalls, putting the sustainability of the company at risk and would result in serious implications for KE and its consumers,” he added.

Presenting the utility’s review petition, KE Director Finance and Regulations Aamir Ghaziani stressed upon the importance of recognising recovery losses to ensure the tariff remains cost reflective in line with the practice adopted by regulators around the world for private utilities.

“KE being a vertically integrated utility, a fixed rate base tariff structure is not suitable and instead a flexible performance based tariff is most suited as it encourages the utility to invest in efficiency improvements and ensures that consumers are not required to pay for investments in advance,” he said.

“Moreover, in determined tariff 2017, returns allowed to KE are lower than offered to other private sector investors who also possess government guarantees and Nepra should ensure that a level playing field is provided to KE,” he added.

KE CEO Tayyab Tareen said that based on an investment of over Rs254bn, KE has developed a robust seven-year business plan in view of the growing power demands and to strengthen the city’s power infrastructure.

Published in Dawn, July 14th, 2017