The National Electric Power Regulatory Authority (Nepra) revealed that power consumers of distribution companies (Discos) and K-Electric (KE) missed out on a projected financial benefit of Rs60 billion during the first quarter of FY2024-25 due to the closure of the 969 MW Neelum Jhelum Hydropower Project (NJHPP) and debt re-profiling of the Karachi Nuclear Power Plant-2 (Kanupp).
Nepra officials disclosed during a public hearing on quarterly tariff adjustments (QTA) that had these two issues not occurred, Rs60 billion could have been passed on to consumers. Initially, Discos had sought a QTA adjustment of Rs8.71 billion, which was later revised to Rs6.47 billion. However, Nepra and the Central Power Purchasing Agency-Guaranteed (CPPA-G) concluded that the actual financial impact was Rs1.36 billion, translating to an adjustment of 13 paisa per unit over two months or 9 paisa per unit over three months.
Nepra also criticized Discos and KE for unscheduled load-shedding, accusing them of manipulating figures to show reduced losses. Electricity sales of Discos recorded a negative growth of 10.85% during the quarter, with regions like FESCO, MEPCO, and QESCO reporting significant declines, attributed largely to increased solarization in agricultural and industrial sectors.
Mepco and Fesco representatives highlighted the growing shift of agricultural tube wells and small industries to solar systems, leading to reduced demand for grid electricity. Member Law, Ameena Ahmed, called for a comprehensive study on the impact of solarization, while Member KPK, Maqsood Anwar Khan, suggested privatization or a public-private partnership model for Discos to improve efficiency.
CPPA-G reported a 7% increase in power consumption in October, partly driven by a winter subsidy-neutral package. The circular debt growth slowed to Rs73 billion during the first quarter of FY2024-25 compared to Rs243 billion in the same period last year. Overall, circular debt increased by Rs11 billion during the first four months of the fiscal year, a significant improvement from Rs301 billion in the same period of FY2023-24.
KE’s General Manager (Tariff), Ghufran Ahmed, acknowledged the impact of solarization but stated that increased demand has offset its effect. Participants at the hearing, including commentators, suggested deferring the QTA adjustment to the next quarter to provide relief to industries following the abolition of Rs1.74 per unit.
Nepra also received feedback on issues such as KE’s unscheduled load-shedding, write-offs, and the need for a new mechanism to implement the winter package effectively.
