NEPRA’s recent decision to renew the generation license for Karachi’s 40-year-old power plants, operated by K-Electric (KE), came under fire at a public hearing on Thursday.
Critics expressed concerns over the plants’ high generation costs, which reach Rs58.44 per unit, along with the renewal’s inclusion of a take-or-pay clause and dollar indexation.
The hearing also addressed KE’s request for a Rs0.16 per unit refund to consumers for overcharges in September, a measure that, if approved, would offer a Rs247 million relief.
However, stakeholders highlighted stark contrasts in power costs, with electricity purchased from the Central Power Purchasing Agency-Guaranteed (CPPA-G) priced at Rs8.57 per unit, compared to KE’s self-generated electricity averaging Rs23 per unit.
KE officials reported a 6% drop in electricity demand for September, noting a 12% decrease in industrial demand and a 3% drop in residential usage, attributing these declines to ongoing economic challenges.
However, the power regulator faced criticism for supporting KE’s high-cost operations, arguing that the seven-year license extension unjustly rewards KE for its aging and costly plants. He called for the removal of the take-or-pay clause and the dollar-indexation feature from the license terms.
NEPRA member Mathar Rana, in a dissenting note, opposed the license renewal, but Imran suggested that the remaining members were biased in favor of KE. He advocated for KE to shift its electricity sourcing to the national grid, which he argued would be a far cheaper option.
In a related development, the NEPRA expressed concerns regarding ongoing renegotiations with certain Independent Power Producers (IPPs) over tariff reductions and early contract terminations, warning of potential adverse effects on the investment environment.
