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Nepra lets KESC hike power tariff by Rs1.66 per unit

The National Electric Power Regulatory Authority (Nepra) on Wednesday approved Rs1.66 per unit increase in the power tariff as proposed by the Karachi Electric Supply Company (KESC) under the monthly fuel adjustment mechanism.

In the absence of Nepra chairman, Nepra member Ghaiyasuddin chaired the Wednesday’s meeting and heard the two petitions submitted by the KESC. During the hearing, top functionaries of KESC informed the authority that in the month of April the utility spent an additional Rs1.44 billion under the fuel cost head and in May Rs1.29 billion.

The KESC sold 1.30 billion electricity units in April and 1.49 billion units in May. Since the cost of fuel is a pass-through item, the regulator consequently allowed KESC the tariff increase it had been petitioning for: Rs1.14 per unit for the month of April and Rs0.52 per unit for the month of May. Nepra is to release the payment schedule at a later date.

However, Nepra members also expressed their reservations that the KESC did not submit the heat rates and efficiency reports of plants it uses for electricity generation. The KESC has now been asked to submit these reports before the next hearing. The regulator also pointed out that the KESC uses the reports of companies that are not accredited and has directed the power utility to get its plants evaluated by the internationally accredited companies.

Nepra also pointed out that part of the reason the cost of electricity is increasing is that the KESC is getting power from the inefficient Bin Qasim plant and not from efficient IPPs such as Tapal and Gul Ahmad.

Javed Mirza adds from Karachi: A KESC spokesperson has confirmed that the increase in tariff will be adjusted in the subsequent month’s bills. However, consumers using 50 units of electricity or less per month will be exempt from the price hike.

The KESC spokesperson said the hearing regarding tariffs was a monthly exercise and that whenever gas supply to the KESC decreases, its dependence on expensive furnace oil increases, which results in tariff hike under the fuel price adjustment formula. The spokesman said that the KESC should be given adequate gas supply so that the people could be given uninterrupted electricity at a lower tariff.

As per the mechanism prescribed by the regulator, the KESC is allowed monthly adjustments in tariffs because of the fuel cost component in its own generation as well as that procured from external sources without taking into account the effect of transmission and distribution losses. The cost of fuel and power purchase claimed by the KESC does not include late payment of surcharge/mark-up/interest.

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