Nepra reserves judgment on KE petition for grant of license

ISLAMABAD-National Electric Power Regulatory Authority (NEPRA) has reserved the judgment on K-Electric petition for grant of electric power distribution and supplier license as majority of the stakeholders have opposed the grant of license solely to one company.
During a public hearing on the KE’s petition, representative of K-Electric (KE) has claimed that it had achieved most of the targets set after the privatization of the utility. NEPRA on Tuesday heard K-Electric’s petition for grant of non-exclusive distribution license and supplier license for the next 20 years to its service territory including Karachi, Dhabeji, Gharo in Sindh and Balochistan’s Hub, Bela and Vinder regions.
It is noteworthy that on July 20, 2023, the NEPRA had allowed renewal on provisional basis of six months in the term of distribution licence of K-Electric Limited (KEL), with the condition that the company shall not have any exclusivity for the provision of distribution and/or electric power supply services. NEPRA had granted July 21, 2003 distribution licence to KEL for the term of 20 years which was expired on July 20, 2023.
Imran Shahid representing Jamaat-e-Islami said that KE is generating expensive electricity that had burdened the consumers. He said that there was a commitment at a time of privatization of the power utility that there would no subsidy involved in future. But there is still subsidy involved that is burden on the national exchequer,” he said. He further requested the regulator to not issue long term license to KE. He said that the license duration should be limited to three or five years instead of the previous 20 years. In response to KE petition for renewal/extension of KE distribution and electric power supply license, stakeholders have also submitted written comments. The Association of Builders and Developers of Pakistan(ABAD) representing 1400 construction companies from Pakistan expressed concern about the monopolize business being run by KE in the mega polis city of Karachi. ABAD said that the citizens of Karachi have suffered due to inefficiency and poor performance of KE since long.
ABAD has opposed any further extension to KE, instead new well organized and reputed distribution companies should be allowed to operate in the city. This will create healthy competition in the market and definitely will be beneficial for the consumers and will also forced KE to improve its performance, ABAD argued. “We hope that NEPRA will not allow further extension to KE rather will issue more distribution licences to other companies to facilitate the consumers with more incentives in terms of services and energy charges, ABAD added.
Karachi Electric Supply Company Labour Union (CBA) in its comments said that at the time of taking over the administrative control of KE, it was committed that investment for amelioration of the system would be brought from abroad and best services would be provided to the valuable of customer of Karachi. The tariff will be capped for the period of seven years. Generation capacity will be increased by installing new power Houses and distribution network will be made affective and no subsidy would be availed from the government of Pakistan.
It is highly astonishing that none of the commitment, as narrated above, are honoured by KE. The loadshedding has not been controlled. The business in this mega city is badly damaged because of non-availability of electricity and the businessmen are migrating to the other countries and the joblessness is at increasing trend day by day. The most of the industry is closed because of the non-compliance of the commitments made by the company. Distribution network has not been improved.
The management has made retrenchment at a large scale and more than 10000 trained/expert employees are sacked in the name of retrenchment. The subsidy from the Government of Pakistan is continuing and has been increased from 5 billion to over 100 billion. In the light of the above, it is strongly hoped that NEPRA will not favor the renewal of contract with KE. According to All City Tajir Ittehad Association, “We firmly believe that the license granted to KE should not be solely granted to KE as Karachi is the city with 20 million population and license must need to be granted to minimum 20 companies.” Pakistan Civic Society in its comments said that the government and Nepra are under the obligation to examine the possibility of engaging several other companies for power supply in Karachi in order to encourage the environment of competition both for the improvement of quality and price of the product in the larger interest of the country. If other power management companies are facilitated of bidding in the electricity supply, it would eventually be a potential source of foreign exchange in this hour of need. It may also be appreciated that ‘monopoly’ in private sector is a curse on the society.
Wafaqi Mohtasib (Ombudsman) also received 31 complaints against KE which have been forwarded to Nepra. All the complaints are forwarded to NEPRA for disposal under their Dispute Resolution Mechanism on merit. The Energy Department Balochistan supported granting power supply license to KE, Petroleum Division and some individual industrialists supported the renewal/extension of KE’s license.
During the hearing, Aamir Ghaziani, KE’s CFO, said that a capital expenditure of around PKR 544 billion (USD 4.4 billion) has been made towards improving the power supply towards Karachi. This has resulted in an addition of 1,957 MW of generation capacity and 12 percentage points improvement in fleet efficiency from 30% in 2005 to 42% in 2023.
Since the most efficient 900 MW RLNG plant was commissioned in the last quarter of FY 2023, the fleet efficiency would increase to 49% when the said power plant would operate for the entire year. KE management shared that since privatization, transmission and distribution system capacity has doubled, while line losses have been reduced by half. Aamir Ghaziani said: “We remain committed to providing customers with the best quality of services. Our PKR 484 billion upcoming investment plan, and proposed addition of over 1,200 MW renewable energy are indicative of this”.

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