High-powered committee reviews Nepra’s decision for tariff reduction

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A special high-powered ministerial committee meeting was summoned to review power regulator’s (Nepra) decision of reducing multi-year tariff by Rs 3.5 for K-Electric (KE) until 2023, on Wednesday after a Chinese delegation led by Wang Binghua, chairman of State Power Investment Corporation of China ( parent company of KE’s new buyer Shanghai Electric (SE)) met with the Prime Minister (PM), Mian Muhammad Nawaz Sharif. The purpose of the meeting was to provide an optimal solution to the impending problem that would be conducive to attracting foreign investment.

The Chinese delegation informed the PM that the recently announced multi-year tariff model by Nepra left little incentive for new investment and would quickly erode profits.

The committee comprising of Finance Minister Ishaq Dar, Planning Minister Ahsan Iqbal, Petroleum Minister Shahid Khaqan Abbasi, Water and Power Minister Khawaja Muhammad Asif and PM’s principal secretary Fawad Hassan Fawad met at the power minister’s office. A cabinet member has been reported to have said that the Shanghai Electric Power Company (SEP) was bringing in significant investment in the power transmission and distribution system, hence Nepra’s decision has put the Chinese investment at risk.

However, the power minister has not yet made a comment about any decisions reached during the meeting.

Previously, SE had entered into a $1.77b deal with Abraaj Group to acquire 66.4pc of  KE’s stake. SE had also revealed its plans for $9b investment by 2030 for system upgrade and capacity addition in generation, transmission and distribution network.

K-electric, upset about Nepra’s decision of tariff reduction had signed a petition for review of Nepra’s decision earlier this week on grounds that the tariff would not benefit the consumers and was against K-electric’s business model and would deter investment into the power sector.