CPPA-G to recover Rs350b

The Central Power Purchasing Agency-Guarantee (CPPA-G) has informed the Senate Standing Committee on Power that its receivables from K-Electric (KE) have reached Rs350 billion.

The committee, which met on Tuesday, asked for details of KE receivables and payables to the federal government. KE Chief Executive Officer Moonis Alvi, while briefing the Senate panel, pointed out that the company was getting 1,000 megawatts of electricity from the national grid.

The committee inquired at what price KE was purchasing electricity from the national grid. CPPA-G officials explained that a basket rate of electricity was determined for all power distribution companies (DISCOs) and KE was paying the same price.

Alvi said that the power purchase agreement with KE had expired in 2015 and since then, no new agreement had been signed.

While briefing about the agreement with CPPA-G, the CEO recalled that a draft interconnection agreement for supply of up to 2,050MW to KE from the national grid was initiated on Nov 10, 2021 for approval by the Cabinet Committee on Energy (CCOE).

In June 2022, a task force was also formed by the prime minister to resolve KE’s issues, which included the execution of forward-looking contracts. Multiple meetings have been held and agreements will be implemented post-approval.

Commenting on the delay in finalisation of the agreement, Senator Fida Muhammad questioned Alvi as to why the agreement could not be finalised since 2015 and who was responsible for the delay.

In response, Alvi remarked that the finalisation of the agreement should not be the headache of KE and that the Power Division should ensure the resolution of the matter.

Sharing an update about the receivables and payables of the company, the KE CEO apprised the members of the committee that KE’s total payables to the government stood at Rs407.7 billion while total receivables from different federal and provincial government entities were Rs483.6 billion. The company has net receivables of Rs76.7 billion. Officials of the Power Division informed the Senate committee that a stay order had been granted by the High Court in that regard.

Power Division secretary said that matters regarding the power purchase agreement with KE would be streamlined to a great extent after one or two more meetings. He expressed the hope that the agreement would be finalised soon. The committee expressed its displeasure over the continuous absence of Federal Minister of Power Khurram Dastgir and the Power Division secretary from its meetings.

Regarding the recent increase in electricity tariff, the additional secretary of the Power Division underlined that there was no increase in the power tariff.

He pointed out that bill recoveries had been deferred but “now these will be made”. The recoveries were delayed due to the 2022 floods in the country, the secretary clarified. He acknowledged that electricity bills would go up, however, it would be in the context of bill recoveries.

When asked about the details of increase in tariffs, officials of the Power Division expressed their ignorance about the hike in electricity prices in the country.

Published in The Express Tribune, February 15^th, 2023.

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