NTDC seeks to recover Rs80b from consumers

Comes under fire for failure to complete transmission line from Thar projects

ISLAMABAD:

The National Electric Power Regulatory Authority (Nepra) on Tuesday grilled the management of National Transmission and Despatch Company (NTDC) over seeking to put an extra burden of Rs80 billion on consumers owing to mismanagement in laying a transmission line from Thar coal projects.

NTDC came under fire at a public hearing conducted by the power-sector regulator to consider increase in tariffs for consumers of all power distribution companies (DISCOs) except for K-Electric (KE).

NTDC management requested Nepra to pass on to consumers a financial impact of Rs5.4 billion, caused by failure of the company to transmit all electricity from Thar coal power projects.

However, Nepra Chairman Tauseef H Farooqui questioned why the burden of company mismanagement should be shifted on to consumers, who were already reeling from high electricity bills.

He called the company’s failure to complete the transmission line project mismanagement and estimated a total financial impact of Rs80 billion over three to four months.

NTDC’s chief financial officer (CFO) argued that the company was in a poor financial health as it was acquiring loans to pay off earlier debt.

He asked for shifting the cost of Rs5.4 billion on to consumers, adding that pending claims of Rs13 billion had been verified, therefore NTDC should be allowed to recover those as well.

The CFO revealed that NTDC was already paying penalties to independent power producers (IPPs) and if the regulator did not allow the recovery of Rs5.4 billion, it would prove to be a double jeopardy.

Giving the reason for delay in the completion of transmission line, NTDC authorities told the hearing that contractors had left work because of increase in the cost of material following depreciation of the rupee and also because of the lack of supplies due to the impact of Covid-19 pandemic.

However, Nepra chairman and other officials countered that NTDC’s excuse was not justified as work on all other projects was going on according to the schedule and only the NTDC’s project suffered delay.

The regulator gave the deadline of Monday next week for coming up with justification for the delay. Otherwise, the recovery of Rs5.4 billion will not be allowed.

The hearing was informed that Kapco had supplied 2.7 gigawatt hours (GWh) of energy at a cost of Rs46.50 per unit during blackouts in Pakistan. However, the power purchase agreement with Kapco had expired in October 2022 and no further deal was signed.

Nepra chairman, while expressing concern, asked why electricity was taken from a plant that did not have the power purchase agreement. In response, the regulator was told that only Kapco had a functional grid, which helped restore electricity after breakdown.

At the public hearing at its headquarters on January fuel charges adjustment for DISCOs, Nepra indicated that tariff would be increased by Rs0.48 per unit.

However, the Central Power Purchasing Agency-Guarantee had sought an increase of Rs1.17 per unit in the consumer tariff.

According to preliminary data assessment, “tariff increase comes to Rs0.48 per unit,” Nepra said, adding that the hike could go up to Rs0.99 per unit by including previous adjustments which were still under scrutiny. “It will be applicable for one month only,” it said.

KE tariff request

Nepra also completed public hearing on KE’s fuel charges adjustment for January 2023 and second quarter adjustment for financial year 2022-23.

It indicated a tariff hike of Rs1.17 per unit on account of fuel charges adjustment while KE had submitted a request for Rs2.70 per unit.

The private power utility also requested a tariff reduction of Rs7.36 per unit for FY23’s second quarter (Oct-Dec) adjustment.

Published in The Express Tribune, March 1^st, 2023.

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