The government’s key power sector stakeholders are still in the dark on the mechanism to implement Prime Minister’s announcement of reduction of Rs 5 per unit in electricity tariff.

This was the crux of background discussions with some officials, as well as, remarks of Chairman National Electric Power Regulatory Authority (Nepra).

The issue of the relief of Rs 5 per unit as announced by Prime Minister Imran Khan was also raised at a public hearing held on Tuesday in Nepra to seek comments on proposed adjustment in FCA and QTA submitted by the Karachi Electric (KE).

Chairman Nepra, Tauseef. H. Farooqi, Member Sindh, Rafique Ahmad Shaikh, Member Balochistan, Rehmatullah Baloch and Member KP, Maqsood Anwar Khan officiated the hearing.

The Authority approved an increase of Rs 2.9035 per unit in FCA of KE for January 2022 to recover Rs 3.176 billion from consumers after adjustments of Rs 550 million and Paisa 30 reduction in Quarterly Tariff Adjustment (QTA) October-December 2021. The power utility had sought positive adjustment of Rs 3.727 billion for January at the rate of Rs 3.4065 per unit.

The interveners from Karachi raised a number of questions on KE’s own generation, gas pressure, excess power purchase from national grid as compared to own generation, net-metering, payment to SSGC, fuel supply to new 900MW RLNG-fired power, whose first unit of 450 MW will begin on March 7, 2022 and will achieve COD in April.

KE’s team headed by CFO, Aamir Ghaziani gave answers to questions raised by the Authority and consumers from Karachi with respect to positive adjustment in FCA.

Tanveer Barry chairman Public sector utilities Power and gas Sub-Committee KCCI said in the last NEPRA hearing that problems remained unresolved and KE did not fully utilise efficient power plants and focused on inefficient power plants.

KGTPS and SGTPC did not operate on full capacity and KCCP was operated on HSD. This month was the same as KE underutilised efficient energy source. Regarding Nepra’s announcement that CTBCM will start from May 1, 2022, Barry replied that wheeling policy has not yet been approved and the case is in the court so how could CTBCM possibly achieve its goal. In January 2022 only 14 GWH was generated through renewables with only 1% share of the market. He said 10% gas is depleting every year and in winter Karachi’s gas has been supplied to Balochistan. He said the prices of furnace oil, RLNG and diesel might go up because of world situation adding that “we should focus on solar and wind power energy”.

He said that as per IMF’s condition, the government will increase base power tariff from July 2022 @Rs 2.17/ kwh. He said that net-metering connection that takes 4-6 months’ time should be decreased so that solar power can be encouraged. Our members are also complaining about net-metering billing, he added.

Around 70% of Karachi is exempted from load shedding and 30% load shedding occurs in high loss areas, he further contended. And out of these 30% only 5-10 percent consumers are involved in electricity theft or have not cleared their bills so why the rest of the consumers should suffer. Load shedding is also a violation of basic human rights and Jodia Bazar which is the largest whole sale market is facing 3 times load shedding in a day, Barry noted.

The issue of Prime Minister’s announcement on reduction of Rs 5 per unit in electricity tariff was also raised with Chairman Nepra, who was unaware of the implementation mechanism of the proposed discount in tariff.

“Honestly speaking, I have talked to Secretary Power this morning to get details. There is a need to understand for all of us. I am meeting with Minister Energy and Secretary Power. Prime Minister’s Office has also played a very active role in concession of Rs 5/ kWh announced by the Prime Minister,” said Chairman Nepra.

He added that “we (Nepra) understand it to some extent but the regulator’s job is very simple, which is to apprise the government as to what should be a fair price of one unit of electricity.

After this, it is the job of the government to give subsidy or not, impose surcharge or not.

It is the prerogative of the government to give subsidy, not Nepra’s. Having said this, it is an announcement from the Prime Minister and we will look at how to implement it. Give us some time but since Prime Minister has announced it and naturally he is respected by all means and we all want that consumers should get the benefit. Since announcement has been made, give us some time to find out the way to implement it,” Chairman Nepra continued.

Minister for Energy Hammad Azhar has already told Business Recorder that discount in tariff will be given through readjustment in budget.

At a recent meeting of Senate Standing Committee on Power, Secretary Power revealed that Power Division has proposed to the government to impose Fuel Price Adjustment (FPA) at Rs 2.71 per unit on consumers on permanent basis, to be adjusted at the end of each fiscal year, after calculating financial impact on fuel.

When Chairman Nepra, who was also present in that meeting, was asked if announcement of Rs 5 per unit reduction in tariff is the same as what Secretary Power unveiled at the Senate Committee meeting, he responded that he has talked to Secretary Power on this issue but did not share details of his chat.

He; however, added that since Prime Minister is the highest public office holder of the country and above all civil servants, when he has made the announcement, it means that it is done; and the question of Rs 2.71 per unit does not arise.

He maintained that since Prime Minister is saying that consumers will get discount of Rs 5 per unit, now the authorities have to find out a mechanism to implement the announcement.

“This is the government’s call. Will it be applicable on all categories of consumers? Will it be a reduction only in FCA? Will it be applicable only to base tariff or will it be a mix of base tariff and FPA? These questions require an answer. Let us hold a meeting and whatever mechanism is finalized, it will be shared in a couple of days.

When questions were placed to some officials of power sector informally to determine the mechanism under consideration to implement the announcement of Prime Minister, they did not have any clue.

“It is a political decision taken at the highest level. Nothing has been shared with the implementing machinery, i.e., bureaucracy,” said an official on condition of anonymity.

The story was originally published in Business Recorder on March 2, 2022.