NEPRA seeks details of foreign contractors engaged with K-Electric

ISLAMABAD: The National Electric Power Regulatory Authority (NEPRA) on Thursday directed K-Electric (KE) to submit details of contractors engaged with KE and also asked for details about how tariff would be reduced with Rs114 billion investment.

NEPRA’s hearing on the application of K-Electric was held under the NEPRA Chairman Tauseef H. Farooqi on Thursday as KE sought an increase in tariff by Rs1.26 per unit on account of the Rs114 billion additional investment.

The NEPRA chairman questioned how tariff would be reduced after Rs114 billion investment and asked KE to submit a detailed reply in this regard. He said K-Electric seems to be responsible for a delay in installing 900MW power plant and if foul play is proved, then NEPRA would not allow it to include a delaying cost in the tariff. He also warned KE officials not to use strict words against the authority.

“If authority uses strict words then you will feel bad,” said NEPRA chairman.

During NEPRA’s public hearing, KE came under fire on the second day for prolonged power outages in Karachi. Chairman NEPRA said that 0.6 million people in Karachi had been facing nine-hour load shedding while the interveners lambasted KE for prolonged power outages and demanded that license of KE should be cancelled due to poor performance. Interveners belonging to Karachi have strongly criticized KE for carrying load-shedding and asked why the license of KE was not cancelled despite reports of poor performance. They asked how a company with a 9.5 per cent efficiency rate was demanding for Rs114 billion additional investments.

KE authorities, at the public hearing, admitted that it was carrying out up to nine hours load shedding in Karachi. Aamir Ghaziani, Chief Financial Officer (CFO) of KE, said that electricity demand was 3220MW against the power supply of 2800MW. He said KE was facing 400MW shortfall.

Aamir Ghaziani, while presenting at the hearing, emphasized that the additional investments were critical to meet KE’s service obligations, including bridging the power demand-supply gap and strengthening the network and thus were in the public interest. In addition to the impact of currency devaluation from Rs121/USD to Rs155/USD, there have also been added costs due to adjustments to the investment plan, increasing working capital requirements, and financing costs on account of burgeoning government outstanding.

KE officials also informed NEPRA that KE had invested around Rs29 billion above what NEPRA allowed in generation and distribution 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 a reduction in load-shedding, with over 75 per cent of the feeders being exempt today.

KE officials further apprised NEPRA with regards to future investments that it was pushing ahead with the 900MW Re-Liquified Natural Gas (RNLG)-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. They said that this would enable the power utility to make 93 per cent of Karachi free from load-shed by the year 2023.
Furthermore, the power utility is committed investing an additional Rs46 billion towards improving the safety and reliability of its distribution network. However, timely regulatory approval of these investments is very critical for the execution of these plans, said KE officials during NEPRA’s public hearing.

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