Kamal asks Nepra to stop KE from transferring burden of bad debt on to bill-paying consumers

Updated December 02, 2019

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Pak Sarzameen Party chairman Syef Mustafa Kamal has sought immediate intervention of the National Electric Power Regulatory Authority (Nepra) into the affairs of the K-Electric, asking it to disallow the power utility from passing on the burden of billions of rupees in the head of defaults or bad debt to bill-paying consumers in Karachi.  — DawnNewsTV/File
Pak Sarzameen Party chairman Syef Mustafa Kamal has sought immediate intervention of the National Electric Power Regulatory Authority (Nepra) into the affairs of the K-Electric, asking it to disallow the power utility from passing on the burden of billions of rupees in the head of defaults or bad debt to bill-paying consumers in Karachi. — DawnNewsTV/File

KARACHI: Pak Sarzameen Party chairman Syef Mustafa Kamal has sought immediate intervention of the National Electric Power Regulatory Authority (Nepra) into the affairs of the K-Electric, asking it to disallow the power utility from passing on the burden of billions of rupees in the head of defaults or bad debt to bill-paying consumers in Karachi.

The former Karachi mayor also asked the power regulator as to why it was allowing the KE to build what he called ‘expensive’ new power plants at the expense of its consumers and the national economy.

In a letter sent to the Nepra chairman, Mr Kamal also attached a document written by former KE chairman Ikram Sehgal to the board of directors of the power utility on Oct 21 — about a fortnight before his resignation as KE chairman — in which he asked as to why the KE was “rushing into” setting up two power plants when it can wait till the Shanghai Electric took over.

Rs9.5bn burden on consumers

Mr Kamal said that his party strongly disagreed with a Nepra order that allowed the KE “to claim defaults/write offs” debt from “honest regularly paying consumers”.

Asks Nepra to get vacated a stay order the KE got five years ago against sharing excess profits with consumers

He stated that the collective amount claimed by the KE in this head for financial years 2017 and 2018 was Rs9.5 billion and the power utility was set to pass on this huge burden on its consumers in Karachi and parts of Balochistan. “We request you to disallow this provision with immediate effect,” he stated in the letter.

KE on stay order for five years

Another issue highlighted by the PSP chairman in his letter was related to a stay order the KE got from the Sindh High Court around five years ago apparently to avoid returning parts of its huge profits to its consumers.

“As per KE’s Annual Account 2018, Nepra determined that approximately Rs43.6 billion should be returned to the consumers under [claw back of excess profit] head,” he wrote, adding that the KE managed to get a stay order around five years ago; although it was still provisioning about Rs25.2bn in its financial accounts.

“Nepra needs to urgently get the stay order vacated so it can set off this amount against future electricity bills to give corresponding tariff relief to KE consumers,” he demanded.

New plants at expense of consumers, economy

Mr Kamal stated that the KE recently announced two power plants — 900 MW on imported Re-Gasified Liquefied Natural Gas (RLNG) and another 700 MW imported coal-based plant — neglecting the fact that excess and “relatively cheaper” electricity was available in the national pool.

He asked Nepra as to why it was allowing the KE “to build these expensive new plants for the net benefit of their foreign shareholders at the expense of the consumers and national economy”.

For strengthening his argument regarding excess electricity and expensive plants, he attached a letter dated Oct 21 written by Mr Sehgal who stated: “With surplus electricity available in South of Pakistan the projects are not justified.”

Mr Sehgal, who later resigned from the KE’s board citing personal reasons, continued: “Why are we rushing into this [the 900 and 700 MW plants] when we can wait till Shanghai Electric takes over and makes the necessary investment? The additional debt will be a huge burden for KE — and ultimately will be paid by the consumers.”

KE’s vague reply to Kamal

When Mr Kamal tweeted his letter along with supporting documents, the official Twitter handle of the KE, without confirming or denying anything, replied: “KE is a law-abiding and responsible organization. We are bound to follow tariff approved by NEPRA, and making changes in the electricity tariff is out of KE’s purview.”

In an apparent reference to the stay order it got from the SHC, the KE said: “Matters under litigation are also adequately disclosed in financial accounts.”

About the new power plants, the KE told Mr Kamal on Twitter that the Bin Qasim Power Station-III project was part of KE’s business plan “formulated after a detailed study to review all possible solutions for increase in the generation capacity including long-term offtake of additional power from the national grid with the objective of bridging the supply-demand gap and decommissioning of its old furnace oil-based Bin Qasim Power Station-I”.

Published in Dawn, December 2nd, 2019