National Electric Power Regulatory Authority (Nepra) Chairman Tauseef H Farooqui has refused to lift the fixed Maximum Demand Indicator (MDI) charges, which are being collected from the business community over the allocation of electricity load.
Even if a factory is closed, industrialists are compelled to pay these fixed charges to power distribution companies (DISCOs).
Farooqui said that deficit needed to be bridged by charging according to the allocation. “The rate of energy is to be determined on the basis of cost of production, which is already very high as we depend on imported fuels and due to the devaluation of currency, and people will have to pay for expensive electricity.”
Speaking at the Lahore Chamber of Commerce and Industry (LCCI), the Nepra chairman termed cold storage facilities seasonal businesses and asked businessmen to cut off their electricity connections and reconnect them when they needed electricity again.
Earlier, LCCI President Kashif Anwar pointed out that recently Nepra had imposed MDI charges on all industrial and commercial consumers under which they were charged 50% of their sanctioned load. As per the MDI, electricity bill has to be paid without using units.
He highlighted that cold storages were an important part of the food supply chain and due to the increase in cost, production expenses had gone further up. He called for reversing the MDI decision immediately, otherwise the cold storage business would become unviable.
He pointed out that businesses were willing to pay electricity bills according to the units consumed instead of the MDI charges, if they used more than 50% of the allotted load.
“Nepra’s decision is badly affecting the business community whose industrial units have been closed or who works on a seasonal basis,” he said.
Responding to that, the Nepra chief said that the rate at which DISCOs were collecting MDI charges was very low, adding that Nepra was paying 10% more to the Central Power Purchasing Agency-Guarantee (CPPA-G).
“Nepra has allowed the seasonal industry to disconnect and reconnect four times in a year without any charges,” he remarked.
“LCCI can let us know their concerns during a hearing on MDI next week. If businessmen use more than 50% electricity load, they are not charged any MDI. But we need to rethink if somebody has a high sanctioned load but has low consumption,” Farooqui elaborated.
He revealed that Nepra had issued licences for supply of 65,000 megawatts of electricity while total requirement of the country was 23,000MW. “We currently have installed capacity for 43,000MW. Some 65% of electricity is generated from imported fuels. We don’t have dollars, the rupee has devalued and coal has also become expensive. Our cost has increased eight times and the overall input cost has increased by 16%. How is it possible to keep tariff low?” he asked.
The Nepra chief emphasised that there was no scientific method of generating electricity in Pakistan. To deal with it, the Indicative Generation Capacity Expansion Plan (IGCEP) had been brought, under which a capacity expansion plan would be given annually for 10 years.
“This will create opportunities to generate electricity at the minimum cost,” he said.
Published in The Express Tribune, February 26th, 2023.
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