K-Electric sends legal notice to ministry over lower tariff

Asks Power Division not to take any adverse action until court decides on its appeal

ISLAMABAD: A legal battle has begun between K-Electric and the federal government over implementation of a tariff decision taken by the National Electric Power Regulatory Authority (Nepra).

While considering a review petition, the power-sector regulator had turned down K-Electric’s plea for a significant increase in its multi-year tariff and had raised it by only Rs0.05 per unit.

The company believes it will not be able to fuel its future investment programme with such a thin tariff increase.



K-Electric has sent a legal notice to the Ministry of Energy (Power Division), asking it to stop implementation of the Nepra’s tariff determination as the Sindh High Court has given a stay order in this regard.

In the letter sent through its legal counsel to the Power Division secretary on July 26, K-Electric asked the ministry to comply with the court’s order and refrain from taking any adverse action against the company including issuance of a notification for implementing the tariff decision until the appeal was decided in accordance with the law.

The counsel warned that any action against the private power utility would constitute disobedience of the court’s interim order. “In such an eventuality, K-Electric reserves all rights to take action to protect its interest,” the counsel said.

The regulator had set the multi-year tariff for K-Electric at Rs12.07 per unit on March 20, 2017, but it did not satisfy the company that later filed a review petition for jacking up the tariff.



In its decision, the regulator increased the tariff by Rs0.70 to Rs12.77 per unit, which was still far below the tariff sought by K-Electric.

Then the Ministry of Energy (Power Division) wrote a letter to the regulator, suggesting a further hike in the tariff and saying the low rate would pose a challenge to financial viability of the company.

“The tariff determined by Nepra should not only ensure that K-Electric is able 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 the letter.

K-Electric had sought a tariff of Rs16.10 per unit, but the regulator did not agree, and finally raised it by only Rs0.05 to Rs12.82 per unit.

In its decision, Nepra dismissed the plea for recovery of Rs16 billion worth of losses from power consumers. It also stopped the levy of Rs8 in bill collection charges and Rs7 in meter rent. The new multi-year tariff is applicable from July 2016 to June 2023.



Industry officials, however, caution that the regulator’s decision is expected to disrupt the company’s financial and operational vision and has caused alarm among industrial circles which fear interruption to a smooth electricity supply.

Industrial and business experts have time and again voiced concern that an inadequate tariff will lead to deterioration in services provided by the mega city’s sole power utility.

Published in The Express Tribune, August 2^nd, 2018.

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