Business

K-Electric seeks Rs11.3 per unit tariff hike

Makes price increase request under fuel cost adjustment for May 2022

Our Correspondent June 24, 2022

A new renewable energy policy had been prepared and concerns of provinces had been addressed to increase the share of renewables to 30% by 2030. PHOTO: FILE

ISLAMABAD:

K-Electric has requested the National Electric Power Regulatory Authority (Nepra) to increase its power tariff by Rs11.33 per unit on account of fuel cost adjustment for
May 2022.

The major impact on the fuel cost adjustment for May came from the increase in the price of furnace oil and electricity purchased from the Central Power Purchasing Agency-Guarantee (CPPA-G).

The price of furnace oil increased 38% in May compared to March while the price of re-gasified liquefied natural gas (RLNG) rose 50% in the same time period.

The price of electricity bought from CPPA-G swelled 53% to Rs13.897 per kilowatt-hour (kWh) in May as compared to Rs9.387 per kWh
in March.

The fuel cost adjustment is reviewed every month and is applicable to the consumer bills for only one month.

It is incurred by the utilities due to the global variation in the prices of fuel used to generate electricity and the change in energy generation mix. These costs are passed on to the consumers following Nepra’s scrutiny and approval. The consumers also receive some benefit when the cost of fuel decreases.

As per Nepra guidelines, K-Electric’s petition will be discussed at a public hearing on July 4. The regulator may approve the request after scrutiny and issue instructions for the period during which the fuel cost adjustment will be applied to the consumer bills.

Meanwhile, the federal government assured the K-Electric administration that its issues would be resolved.

Federal Minister for Power Khurram Dastgir Khan committed to resolving the power utility’s financial and contractual issues at the earliest in a meeting with the Saudi Arabian and Kuwaiti investors of the company.

The minister assured them that his preference was to put K-Electric on firm foundations for the years to come. “The government is focused on long-term policymaking for the betterment of the country rather than myopic decision-making,” he remarked.

The K-Electric investors expressed high hopes, saying the company would improve further and become a model for the other distribution companies.

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The minister called for modernisation and digitisation of K-Electric and stressed that the company needed to focus on customer facilitation and service delivery.

Aljomaih Group Chairman Sheikh Mohammad Abdulaziz Hamad AlJomaih, National Industries Group Kuwait CEO Riyadh Edrees and K-Electric CEO Moonis Alvi were present in the meeting.

Prime Minister Shehbaz Sharif on Thursday also gave directives for resolving all outstanding issues of K-Electric in the next three months.

He gave the directives when the Aljomaih Group chairman, National Industries Group CEO and K-Electric CEO held a meeting with the PM.

They also held a meeting with Nepra, seeking resolution of the long-standing issues.

K-Electric is facing the issue of release of tariff differential subsidy and gas supply from Sui Southern Gas Company. Nepra had also been raising the issue of signing a gas supply agreement between K-Electric and SSGC.

Due to shortage of local gas supply, K-Electric tariff was going up as it requested Nepra to raise power tariff by over Rs11 per unit due to use of expensive furnace oil and RLNG.

Published in The Express Tribune, June 24^th, 2022.

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