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KESC plea for tariff hike opposed

August 31, 2012

KARACHI, Aug 31: Electricity consumers on Friday gathered at a public hearing held by National Electric Power Regulatory Authority (Nepra) at the Pakistan Naval Fleet Club to register their grievances against the Karachi Electric Supply Company (KESC) and oppose its request for a tariff increase as a result of monthly fuel cost adjustments.

While the power utility requested Nepra to consider a tariff increase of 17.555 paisa per unit for the month of June, a consumer argued that the KESC had made a request for the tariff increase on the basis of its March financial statements whereas it should have made the May statement the basis of its case.

KESC Regulatory Affairs Director Abdul Rauf Younus presenting the power utility’s case said that they sought the tariff increase for June in view of the rise in furnace oil prices since March 2012 and the increase in the power utility’s generation even when there was a reduction in the oil prices.

However, Pasban Helpline Public Issues Director Abu Bakr Usman argued that the KESC should have presented the statement of May instead of March to seek the increase in the tariff for June. “Had they done so, the cost quoted by them would have been less than 17 paisa,” he said.

Addressing the panel, KESC Shareholders Association General Secretary Choudhary Mazhar Ali asked what right the KESC had asking for a tariff hike when the power utility already got around Rs6 billion a month adding up to Rs70 billion a year in subsidy from the government.

“Karachi has two million consumers so the subsidy amounts to Rs3,000 per consumer. Sixty-nine per cent of the consumers are residential, 22 are commercial and nine industrial. When the subsidy they get is for the very purpose of fuel cost adjustments, what excuse does the power utility have for asking for a tariff increase, which, if accepted, will be passed on to the end consumer,” he said.

In his response, KESC Regulatory Affairs Director Abdul Rauf Younus said that the subsidy would not even be required if the KESC was allowed to take its due in tariffs.

Mr Ali then said that despite the huge subsidy enjoyed by the KESC, its power generating capacity had reduced over the past five years.

“The company, which was generating 9,304 million kWH during 2005-2006, generated only 7,826 million kWH in the financial year of 2010-2011,” he said.

“If the generation is less, how is the KESC using more oil?” he asked while saying that there should be some kind of monitoring or a metering system in place by Nepra to know how much furnace oil the KESC really used and how much the poor consumers had to pay for the wastage due to the company’s Operation and Maintenance (O&M) losses.

SITE Association of Industry’s fuel, gas and power sub-committee chairman Dr Qazi Ahmed Kamal also wanted to know the amount of fuel the KESC used, the manner in which it was used, the resultant output from the consumption which he insisted should be Nepra’s sole criterion ahead of deciding the tariff.

He asked: “Is Nepra now reduced to the level of an accountant or is it moving towards a higher level of performance by rising above the financial issues and doing something positive for the end user rather than check accounts?”

He said that Nepra must establish a co-relation between the unit generated and the fuel component that is used against a standard analysis based performance criterion. “This means that based on energy audits, there should be a plant-wise table of reference that will tell us what level of gas or furnace oil should produce what levels of power.

“Until this is done we can not justify the fuel consumption levels,” he added.

He asked as to how Nepra could comment on the totals presented to it for approval or claims until the authority was aware about how many units of gas and oil each of the KESC power production facilities needed to produce one KWH?

“If they have such a table we request to be given that so that we may also be able to calculate the fuel and power co-relations as we think that there must be a mandatory level of line losses that must form a basis of all such fuel related payments. If the KESC violates that standard then it should not be given the benefit,” said Dr Kamal.

Arif Bilwani, a general consumer, wanted to know why KESC new power generation plants and their enhanced efficiency was not taken into account as the older plants due to which they were charging the current tariffs must have been less efficient. “The tariff should be reduced in view of upgrading systems,” he added.

Also, he argued, the 60,000 or so employees that the KESC was forced to keep on earlier due to its understanding with the government when the power utility was being privatised had been dismissed. “That too must have reduced KESC losses and Nepra should look into cutting down further tariffs that the power utility was and is getting on account of that,” he added.

The four-member panel comprising Nepra acting chairman Ghiasuddin Ahmed and the authority members Shoukat Ali Kundi, Habibullah Khilji and Khawaja Muhammad Naeem requested all the stakeholders present at the hearing to present their side to submit their suggestions and comments to the regulatory authority in writing. It being Friday with pressing time limitations due to prayers they could not hear out all the people. Therefore they issued another date, Sept 5, for hearing the individual cases, but in Islamabad.