Nepra allows another increase of Rs4.90 per unit in K-Electric tariff

ISLAMABAD-In less than a week time, National Electric Power Regulatory Authority (Nepra) has allowed another increase of around Rs 4.90 per unit in the electricity prices for K-Electric on account of quarterly adjustments.
In its decision released here, the Nepra said that the Authority based on the information, data and record provided by K-Electric, had approved the quarterly adjustment claims of K-Electric for the period from Jul.-Sep. 2016 to Jan.-Mar. 2019.
If approved by the federal government, the decisions will allow K-Electric to collect Rs 106 billion from the power consumers in Karachi.
It is pertinent to mention here that on December 27, 2019, also the National Electric Power Regulatory Authority (Nepra) had allowed K-Electric Limited to increase power tariff by average Rs 1.40 per unit under fuel charges adjustments for the period from July 2016 to June 2019.
The tariff has been increased to recover Rs 106 billion from the consumers for total 11 quarterly adjustments. The revised tariff works out as Rs.17.79 per kWh and the impact of total amount being allowed is around Rs.106 billion. The total amount would be recovered from the consumers in electricity bills for coming months. The electricity price has jumped from 12.81 per unit to 17.69 per unit registering an increase of around Rs. 4.8 per unit, Nepra official said.
The major reason for increase in power tariff was use of RLNG by K-Electric, having additional impact of Rs 24 billion. The other reason was increase in prices of gas from reference price of Rs.400 per MMBTU to Rs.629 per MMBTU. Moreover, increase in price of Furnace oil (FO) was also another reason as its price went up from reference price of Rs.27,000 per metric ton (MT) to around Rs.70,000/MT. Increase in O&M and capacity cost of IPPs owing to indexation and exchange rate variation also led to hike in electricity rates.
Reconsideration Request in the matter of K-Electric MYT 2017 for the period from FY 2016-17 to FY 2022-23 (07 Years) was decided by the Authority on July 05, 2018, whereby an average sale rate of Rs.12.8172 per kWh was approved.
K-Electric challenged the decisions of the Authority in the Sindh High Court (SHC), whereby, the SHC granted stay order regarding notification of the determined tariff. K-Electric afterwards, withdrew its petition from the SHC and pursuant thereto, the multiyear (MYT) 2017 of K-Electric was notified by the federal government vide SRO No. 576(I)/2019 on May 22, 2019.
As per the mechanism provided in the MYT 2017 determination, the Authority has to review and revise the approved tariff on monthly, quarterly and annual basis in accordance with the prescribed adjustments mechanism.
The impact of monthly variations in K-Electric own generation's fuel cost component as well power purchase price to the extent of targeted T&D losses has to be adjusted on quarterly basis.
In addition, the monthly variations in the variable O&M and fixed costs of the PPP, as allowed by the Authority, are required to be adjusted on quarterly basis. The actual payments in respect of WWF, WPPF etc. to the IPPs being pass through are to be adjusted on yearly basis upon production of verifiable documentary evidence.
The allowed O&M cost component of K-Electric are subject to CPI-X indexation annually. The entire allowed tariff components are subject to adjustment with allowed level of losses on annual basis. The hearing was accordingly held on August 21, 2019 in Karachi and NEPRA Tower, Islamabad through video link. An advertisement in this regard was published in newspapers on August 08, 2019.
A spokesman of the NEPRA however clarified that it is incorrect that KE consumers will pay additional Rs.4.87 per unit. Tariff is uniform in whole of Pakistan including for KE consumers, NEPRA gives different tariff for all Discos but the federal government makes it uniform across the country including for KE consumers, the spokesman said. To make it uniform, GoP gives subsidies to different categories of domestic, commercial, industrial and agricultural consumers. Subsidies are provided across the country to all the consumer including KE consumers.

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