KE petitions NEPRA for adjustments to tariff in mid-term review hearing

Karachi: K-Electric presented its petition for adjustments to its multiyear tariff on account of significant rupee devaluation, changes in investment plan requiring new interconnections grid and investments to improve reliability and safety of network, and adjustments for other factors beyond KE’s control. KE requested the regulator to allow related adjustments to enable the power utility to meets its obligations towards consumers. These were presented at the mid-term review hearing organized by the National Electric Power Regulatory Authority (NEPRA) today.

KE officials present at the hearing briefed NEPRA about the company’s petition for additional investments of PKR 144 billion over and above the NEPRA allowed capex of PKR 299 billion for the tariff control period, and emphasized that these additional investments were critical to meet the service obligations, including bridging the power demand-supply gap and strengthen the network, thus are in the interest of consumers. It was highlighted that the approved MYT assumes an exchange rate of PKR 120/USD (December 2019), whereas the actual was PKR 159/USD, thus having material implications for the company. Furthermore, there have been added costs resulting from adjustments to the approved investment plan because of changing operational dynamics as well as increasing working capital requirements and financing costs on account of burgeoning government outstanding, all of which are beyond the control of the power utility.

KE officials present also informed NEPRA that the company had invested around PKR 29 billion over and above NEPRA allowed in the Generation and Distribution (excluding G&T projects) which has resulted in significant improvements in generation fleet reliability and availability, including efficiency improvements passed on to consumers along with significant improvements at consumer level which includes reduction in load-shed, with over 75% of the feeders being LS exempt today.

Elaborating further on the impact of these investments the power utility’s senior leadership said that through continued investments in the T&D segment, around 5,500 PMTs have been added taking the total to around 28,800 PMTs, while another 3,500 are expected to be added by 2023. Total transmission capacity has increased to over 6,300 MVA from 5,100 MVA since 2016, enabling KE to have sufficient T&D capacity to meet the peak power demand.

With regards to future investments KE officials apprised the Regulator that it was pushing ahead with the 900 MW RLNG-based BQPS-III and that additional 1,400 MW of electricity would also be added from the National Grid by 2023 with the construction of two new interconnection facilities. This would enable the power utility to make 93% of Karachi free from load-shed by the year 2023. Further, the power utility is committed to invest an additional PKR 46 billion towards improving safety and reliability of its distribution network. However, timely regulatory approval of these investments is very critical for execution of these plans.

Members of the public also participated in the hearing, and in view of the interest from public and importance of this matter for the future supply of power situation in Karachi, NEPRA decided to continue the hearing the following day and will give its decision after taking all the inputs into account.

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