Nepra reserves ruling in Rs120bn recovery case

Published September 26, 2019
The power division and its power companies at a public hearing on Wednesday sought recovery of about Rs120 billion in additional revenue on account of fuel cost, the impact of high inflation and prior-year adjustments in power purchase price and distribution margin.  — APP/File
The power division and its power companies at a public hearing on Wednesday sought recovery of about Rs120 billion in additional revenue on account of fuel cost, the impact of high inflation and prior-year adjustments in power purchase price and distribution margin. — APP/File

ISLAMABAD: The power division and its power companies at a public hearing on Wednesday sought recovery of about Rs120 billion in additional revenue on account of fuel cost, the impact of high inflation and prior-year adjustments in power purchase price and distribution margin.

This will require a cumulative increase of about Rs3 per unit in average consumer tariff for all distribution companies (Discos) of ex-Wapda. This will include about Rs1.87 per unit increase for one month to be recovered in November on account of monthly fuel price adjustment after a separate public hearing on Oct 4, while the remaining Rs1.15 per unit increase will remain applicable for at least six months.

The National Electric Power Regulatory Authority (Nepra) conducted the formal hearing, but reserved its ruling on the request of the distribution companies to recover about Rs93bn from consumers on account of quarterly adjustments.

An official explained that subject to Nepra approval, this amount would be recovered from consumers at the rate of about 60 paisa per unit for one year or Rs1.15 per unit for six months.

Distribution companies’ plea for recovery of the amount will require cumulative increase of Rs3 per unit in consumer tariff

At the public hearing presided over by Nepra chairman Tauseef Farooqi, the regulator heard viewpoints of the power division, Central Power Purchasing Agency (CPPA) and some distribution companies for their common request to pass on the Rs93bn impact to consumers on account of prior-year adjustments and distribution margin indexation with inflation and exchange rate.

Three major distribution companies of Lahore, Islamabad and Faisalabad have in their applications demanded an additional recovery of Rs30bn under their multi-year tariff (MYT) adjustment mechanism for the fiscal year 2019-20, while all the Discos, including these three, demanded Rs33bn adjustment for the last two quarters of 2018-19 on account of power purchase price and distribution margin.

During the course of hearing, Nepra explained that it had also received another application on Tuesday from the power division for another additional requirement of Rs30bn revenue to be recovered from consumers on account of inflationary impact on operation and maintenance cost of the power companies due to much higher inflation.

Representatives of the power division and CPPA pleaded that out of additional requirement of Rs30bn for inflationary impact, an amount of Rs19bn should be passed on to consumers along with quarterly adjustments on a provisional basis and a separate hearing should be held to deal with the matter for future.

Nepra case officers opposed the fresh request, saying the distribution companies were previously allowed Rs24bn recovery from consumers on account of bad debts for one year with a condition that these write-offs would have to be approved by their respective boards of directors. However, the Discos had been recovering this additional amount for 18 months without a report if their boards had approved the previous write-offs.

Nepra directed the Discos to submit written reports on the subject and also provide their audited accounts to consider their requests for quarterly adjustments.

Published in Dawn, September 26th, 2019

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