NEPRA dismisses claim of extra Rs62b collection in Karachi

Insists no excessive tariff has been charged from the power consumers

Zafar Bhutta February 07, 2017

ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) has dismissed the claim of additional Rs62-billion payment by consumers to K-Electric and has termed statements of the Ministry of Water and Power an attempt to sow seeds of discord in society and weaken the foundation of the federation of Pakistan.

The regulator’s remarks came after the power ministry in a letter about two weeks ago argued that K-Electric had collected billions of rupees from Karachi consumers through excessive tariff determination.

It also asked the regulator to make adjustment in new tariff in order to pay the extra amount back to the consumers.

Responding to the ministry, the regulator, in a hard-hitting letter, said the conclusions drawn by the Ministry of Water and Power were not only incorrect, but were also based on sheer misunderstanding of the performance-based multi-year tariff regime.

“An effort has been made … to give an impression that consumers of Karachi have been discriminated compared to the rest of Pakistan,” Nepra said, while calling the move deplorable.

“It appears to be a blatant attempt to malign and undermine the performance and achievement of Nepra and the present government,” the regulator said, adding such baseless and unfounded allegations could have serious repercussions for smooth functioning of the entire power sector.

According to Nepra, the excess profit earned by K-Electric during financial years 2012, 2013 and 2014 have already been adjusted to the tune of Rs12 billion with an approved ‘claw-back’ mechanism and the regulator has already given decisions in this regard.

Furthermore, the claw-back mechanism with respect to excess profits earned in 2015 and 2016 is currently under consideration and relief in this regard will be provided to the consumers in accordance with the multi-year tariff framework.

Nepra argued that no excess tariff had been charged from the consumers of K-Electric because a uniform tariff is applicable throughout Pakistan including the area covered by K-Electric.

“Although Nepra determines a separate tariff for each of the distribution companies and K-Electric, the government, following its own socio-economic objectives, provides subsidy or levy a charge in order to make the consumer tariff uniform all across the country,” it said.

“Thus, the presumption of overburdening K-Electric consumers is not correct.”

According to the regulator, the multi-year tariff determined on September 10, 2002 was a performance-based tariff, which was approved keeping in view the guidelines issued by the Ministry of Water and Power.

It was also in line with the tariff model proposed by international consultant PricewaterhouseCoopers engaged by the Privatisation Commission and comments from all stakeholders including the Ministry of Finance, Ministry of Commerce, Ministry of Industries and Planning Commission.

Under the multi-year tariff determination, Nepra claimed, a tariff of Rs4.74 per unit was approved, up 6.5% against 16% proposed by K-Electric.

Published in The Express Tribune, February 8th, 2017.

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