KESC defends NEPRA’s power tariff increase

KESC has defended NEPRA’s decision to allow the company to increase its power tariff due to increased oil and gas prices.

KARACHI: Karachi Electric Supply Corporation (KESC) has defended NEPRA’s decision to allow the company to increase its power tariff. KESC says that NEPRA has allowed the revision due to the prices of furnace oil and gas prices increasing.

KESC said that its tariff was adjusted by NEPRA to take into account the quarterly variation in fuel mix ratios, power purchasing costs, according to a press release on Wednesday.

They pointed out that this had been overdue as no such tariff adjustment had been made since July 2009, despite significant price increases in furnace oil, purchased from PSO and power, purchased from IPP’s and Wapda.

A while back, the MQM, a coalition partner of government, criticized NEPRA’s decision and their parliamentarians walked out of parliament in protest.

KESC’s fuel mix has deteriorated during this period because of a significant reduction in gas supply from last year.

KESC had argued that the entire Rs6.8 billion arrears should be treated as part of the Consumer Tariff Subsidy to be paid by the Ministry of Finance and not charged from the consumers.

KESC is getting less gas; therefore burning much more furnace oil, this year compared to last year. This is why KESC needs more gas or furnace oil at an equivalent price, to keep their tariffs at reasonable levels.

They believe that the ministry of finance should continue to subsidize the consumers (Consumer Tariff Subsidy). Furnace oil is approximately 2.5 times more expensive than gas.

Published in the Express Tribune, June 10^th, 2010.