Karachiites may endure another power tariff hike

A major Rs5.4 per unit increase in the power tariff is on the cards for the consumers of Karachi-Electric (KE) on account of quarterly and monthly tariff adjustments.

The National Electric Power Regulatory Authority (Nepra) reserved its ruling on Monday on two separate petitions of the KE, seeking Rs5.499 per unit increase in power tariff on account of monthly fuel charges adjustments (FCA) and quarterly adjustment for the first quarter (July-September 2021) of fiscal 2021-22.

In the public hearing on the KE petitions, Nepra Chairman Tauseef H Farooqi also hinted at the liberalisation of the country’s power supply market, allowing big businesses to purchase power from any distributor they want.

The KE had sought an increase of Rs0.317 per unit on account of monthly fuel charges adjustments for November 2021 and Rs5.182 per unit on account of the quarterly adjustment for the first quarter of fiscal 2021-22, (July-September). The impact of the monthly FCA will be Rs446 million on the consumers.

During the hearing, a representative of the Karachi Chamber of Commerce and Industry (KCCI) said that electricity would become very expensive for them. “What should we do? Should we shut down the industry or hold a sit-in in front of Nepra head office,” the KCCI representative asked.

However, the Nepra chairman responded that “we are introducing a new system for high power consuming businesses”, adding that Nepra was allowing power purchases, where big business will buy electricity directly from whomever they want.

While inviting the KCCI, the Nepra chairman said that the Karachi Chamber was very important. “You should come to Nepra and discuss all the issues with us,” he said. He observed that the November fuel price adjustment would be reduced by more than 75 paisa per unit.

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A KE official told the hearing that they had signed preliminary drafts of an agreement to take 2050 megawatts electricity from the national grid. “We have also reached a preliminary agreement with the NTDC [National Transmission & Despatch Company] in this regard. In the coming days, the agreement will be finalised,” he added.

It was further informed that the KE would start power supply from its new 900-megawatt plant this month. “The first unit of the power plant will be operational this month, while the second unit will start production in June,” the official added. Later, Nepra reserved its ruling.

The KE had requested the regulator to allow Rs0.317 per unit increase in its service area on account of the monthly FCA for November 2021 under the multi-year tariff 2017-23. However, later the demand was withdrawn and the company had requested for a decrease on the basis of actual data.

Under the tariff mechanism, changes in the fuel cost are passed on to the consumers only on a monthly basis through an automatic mechanism, while the quarterly tariff adjustments on account of variation in the power purchase price, capacity charges, variable operation and maintenance costs, use of system charges and including the impact of transmission and distribution losses are built in the base tariff by the federal government.

It is worth mentioning here that for the FCA for the month of October, the KE had requested for an increase of Rs1.38 per unit. NEPRA had conducted a hearing of the petition and had reserved the judgment. For the FCA for month of September, NEPRA had raised electricity tariff by Rs3.75 per unit.