Daily Times

KARACHI: Stakeholders’ mixed responses over the proposed upward revision in electricity tariff for next 10 years sought by K-Electric (KE) indicate that the KE’s Multi Year Tariff (MYT) petition is likely to be approved with some modifications.

The National Electric Power Regulatory Authority (Nepra) had sought comments from stakeholders regarding K-Electric (KE)’s MYT petition. ‘Thorough analysis of received responses and answers of KE indicate that Nepra is likely to approve the KE’s proposed MYT petition’, said industry experts.

Government of Sindh’s energy Department has raised some questions over Rs 496 billion business plan of KE saying that government of Sindh has already taken measures to invest in the generation business through gas/renewable technologies and a new entity Sindh Transmission & Dispatch Company (Pvt) Limited has been established which will invest in the transmission business throughout the province. So, KE should invest and focus on the improvement of its distribution business to achieve reliability and quality service to the end consumer.

Further, the Energy Department of Sindh said that the KE business plan shows addition of coal, LNG and dual fuel based generation capacity but does not show any addition of environment friendly power (wind/solar) therefore, addition of renewable energy in the business plan is essential.

“The total demand for the year 2028 has been calculated as 5243 MW. Retiring/aging of the plants has not been taken into account. Replacement of 650 MW NTDC supply in 2020 has also not been covered to balance the demand supply gap”.

Maintenance of spinning reserves has not been mentioned for the next 10 years which is necessary for system stability. The fleet efficiency of plants for 10 years has been envisaged from 37% to 43% that is not sufficient in lieu of 72% addition of new power plants. The efficiencies of new proposed power plants and existing power plants may separately be defined to evaluate the actual performance of Petitioner Company.

“KE has not mentioned the breakup of estimated amount/ financial impact of planned projects in relevant components for the proposed period of 10 years as probably the financial impact of all projections would be in trillions which is expected to be borne by consumers /stakeholders”, it added.

The KE has used technical terms to make the petition attractive as it tried to safeguard the interest of the company. No support / relief are proposed for consumers/stakeholders in the instant petition, it added.

Sindh government said the proposed business plan neither show any impact on the net metering policy recently announced by NEPRA nor are any arrangements to implement this policy there.

Energy Department proposes that KE may rationalize the increase in the tariff of Rs 0.66Mwh in operation and maintenance (0&M) component of the existing tariff upto 25%. Time period of ten years required to be rationalizing up to 33% in first term in order to ascertain the performance and achievement of the petitioner. Further increase may be considered thereafter.

KE in a response to Sindh Government’s reservations said while STDC will cater the transmission needs of the province, KE’s investment will be more focused to maintain, upgrade and enhance the current transmission system. KE is fully cognizant of the importance of renewable energy projects and has planned to add renewable energy in its power portfolio by attracting independent power producers.

“KE will deliver its investment plan at the lowest cost and be able to reduce the real tariff in the long term. ‘The consumer does not have to bear the burden of a guaranteed return being built-in in the tariff, rather the entity is incentivized to investment in order to improve the efficiency, beat the benchmarks and earn a reasonable return”.

According to the break-up of its Rs 496 billion investment plan, Rs 203 billion to be invested in generation and Rs 162 billion will be invested in new generation projects. With respect to the concerns regarding net metering, the matter is under discussion with NEPRA.

Since the new management takeover in 2009, KE has brought in efficiencies in 0&M costs by implementing a number of operational improvements across all business units, KE added.

Meanwhile, stakeholders including Voice of Karachi, Pakistan Business Council Federation of Pakistan Chamber of Commerce and Industry (FPCCI), The Citizens Foundation, SIUT, Overseas Investors Chambers of Commerce and Oursun energy Layton Rahmatuilla Benevolent Trust (LRBT), and Habib Bank Limited (HBL) fully supported the KE’s MYT petition.

On the other hand, Central Power Purchasing Agency Guarantee Limited (CPPA), Karachi Business Intelligence Wing, PASBAN, Whistle Blower, Shehri, K-Electric Consumer Forum, Karachi Chamber of Commerce and Industry (KCCI), Jammat Islami, Anwar Kamal Assocites and Aarif Bilwani raised reservations over the continuation of existing tariff for next ten years. Though, KE has answered all questions in detail raised by aforementioned stakeholders.