ISLAMABAD: The K-Electric’s request for Rs68 billion in ‘unrecoverable dues’ from defaulters came under strong opposition from stakeholders for its additional impact on consumers and taxpayers in the shape of budgetary and tariff adjustment.
The Karachi-based power utility has filed a write-off claim of Rs68bn, which it says accumulated over seven years since FY2017 based on a tariff determination of 2018 that allowed about 1.69 per cent provision for recovery losses.
The utility’s CEO, Moonis Alvi, and Chief Financial Officer Amir Ghaziani called it the company’s right which should either be built into the consumer tariff or taken care of by the government.
Most of the consumers and interveners, in their written comments and during public hearing presided over by Nepra Chairman Waseem Mukhtar, opposed the KE’s demand and said it should be rejected.
Utility says the amount accumulated over seven years from FY2017
The KE’s team said these write-off claim amounts remained unrecoverable despite the “best efforts against defaulters”, including multiple disconnections, engagement with specialised recovery agencies, and area specific initiatives.
Mr Ghaziani said since the start of the tariff control period (FY 2017-23), KE’s total billed revenue to non-public sector consumers stood at Rs1.73 trillion while it collected Rs1.6tr.
The write-off claim was around 3.9pc of revenue billed to non-public sector consumers and lower than KE’s actual recovery loss of 7.1pc
“We have requested write-off claims for 2017-2023, as 100pc bill collection is not possible due to law and order and slums,” he said, adding that KE actually incurred a loss of Rs119bn on account of low recoveries, but the entire loss could not be written off due to Nepra rules.
Nepra members raised questions as to why legal action was not taken against those who had more than Rs10 million dues. Nepra Member Rafiq Shaikh asked as to who will bear the burden of defaulters and why paying consumers should pay the price for non-payment by others. Mr Ghaziani suggested that the burden of write-off claim could also be taken as a subsidy by the federal government.
The Centre has a budgeted subsidy of Rs88bn and Rs68bn write-off can be adjusted there, he argued.
The representative of Jamaat-i-Islami said that the government should stop rewarding K-Electric, describing its claims as ‘fake’ and ‘bogus’
Instead of third party auditor, the JI said, the claimed Rs68bn was audited by the KE’s own auditor. “Accepting these claims will be a great injustice to consumers who pay their bills despite hardships”. He said that KE was silent on the return of Rs54bn to users.
Stay orders
Tanveer Barry of the Karachi Chambers of Commerce and Industry (KCCI) said “we reject the write-off claims as this would affect honest consumers”.
He recalled that the utility had obtained stay orders on a staggering Rs100bn it was asked to refund consumers. He said Karachiites were also paying a surcharge which had nothing to do with KE consumers. The KE could claim the same doubtful debt as a write-off again if it had already been used to reduce profits for clawback calculations in the past, Mr Barry added.
He also questioned the KE claim for non -recovery of bills issued against hook connections and said the company was provided a margin of 5.2pc in its base tariff to account for losses due to law and order situation.
Published in Dawn, December 11th, 2024
