KARACHI: Energy Minister Khurram Dastgir Khan said on Friday the government and K-Electric Ltd have reconciled the disputed tariff differential subsidy (TDS) claims “up to 90 per cent”.

Speaking at the headquarters of K-Electric, Mr Dastgir said a committee headed by former premier Shahid Khaqan Abbasi will fully resolve the longstanding issue “in the next few weeks”.

TDS consists mainly of the subsidy that the federal government promises to pay in order to ensure that the tariff paid by K-Electric customers is no different from the electricity rate prevailing in the rest of the country.

At the end of March, K-Electric’s net receivable from various federal and provincial entities amounted to Rs23.9 billion on a principal-due basis. “(An) increase in fuel prices and non-provision of local gas supply to K-Electric have resulted in a consequential increase in K-Electric’s tariff differential subsidy claims receivable from the government,” it said in its latest quarterly accounts.

In addition to the subsidy paid to maintain equity among consumers from all geographical locations, the government also extends relief programmes and incentives in the name of industrial support or winter packages to all kinds of consumers. These subsidies also add to TDS under which total payables to all distribution companies (Discos) amounted to Rs83.4bn at the end of 2021-22, according to the power sector regulator.

The spokesperson for K-Electric didn’t respond when asked about the company’s latest TDS claim position.

The National Electric Power Reg­ulatory Authority (Nepra) believes the non-payment of subsidies on time reduces the ability of Discos to pay back to transmission and generation companies. This becomes one of the main reasons for liquidity shortage in the power sector, which contributes to circular debt.

“We’re giving a huge relief to the people of Karachi. The tariff differential subsidy for K-Electric customers alone is going to be Rs171bn in 2023-24,” he said, adding that the budgeted amount for the rest of the country is Rs151bn.

The total subsidy that K-Electric expects to receive in the next fiscal year is Rs315bn, up 63.2pc from the revised estimate of Rs193bn for the ongoing fiscal year. The next year’s subsidy is divided into four parts, namely tariff differential (Rs171bn), TDS arrears (Rs127bn), tariff differential for agricultural tube-wells in Balochistan (Rs10bn) and industrial support package (Rs7bn).

“The IMF has no objection to it,” the minister added.

He claimed that “70pc areas” in the K-Electric jurisdiction are getting 24-hour electricity supply. Load-shedding taking place in the rest of the neighbourhoods is because of poor recovery, not a shortage of electricity in the system, he said.

Mr Khan said the electricity supplier is working towards ensuring that “load management” is brought down to the transformer level. This will minimise the number of paying customers suffering power outages because of their non-paying neighbours, he said.

Mr Khan responded favourably to a suggestion that K-Electric be given the first right to buy gas from Sui Southern Gas Company because it doesn’t have access to cheaper hydel-based electricity.

Published in Dawn, June 17th, 2023