Energy ministry reaffirms support to K-Electric in tariff row

Asks NEPRA to take final decision in line with govt's policy directives

ISLAMABAD: The Ministry of Energy (Power Division), while reaffirming its support to K-Electric, has pressed the industry regulator to take a final decision on the company's multi-year tariff in line with policy directives of the federal government in order to create a favourable environment for investment in power projects.

"Tariffs determined by Nepra (National Electric Power Regulatory Authority) should not only ensure the ability of K-Electric to provide adequate services for its customers, it should also offer an environment conducive to investment to encourage future privatisations as well as expand private sector's footprint in the power sector," the ministry emphasised in a letter sent to Nepra - the industry regulator.



The ministry's views came after Nepra sought written comments from the federal government and asked whether the government would endorse a K-Electric's letter that formed the basis for the tariff reconsideration request.

In the letter, the Power Division also emphasised that the regulator should decide whether the K-Electric's demand supported government objectives.

During a hearing conducted by Nepra some time ago on the request of the Ministry of Energy (Power Division) to reconsider the K-Electric's multi-year tariff, a representative of the Power Division had pointed out that the government was in the process of privatising public-sector enterprises and any adverse tariff decision would have implications for the privatisation plan.

It would also adversely affect financial viability of K-Electric and subsequently consumers of Karachi would suffer, the representative said.

On the occasion, people representing various economic sectors voiced concern over the revised multi-year tariff set by Nepra at Rs12.77 per kilowatt-hour in October 2017, which was 18% lower than that sought by K-Electric.

Leading banks told Nepra that the determined tariff would undermine K-Electric's ability to raise financing for ongoing and future power projects.



Relevant stakeholders pressed the regulator to carefully assess possible repercussions of the revised tariff as a lack of investment would have far-reaching implications, particularly for the industrial consumers of Karachi, who had been to date enjoying exemption from outages.

Published in The Express Tribune, December 30^th, 2017.

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