Security deposit hike opposed

Businessmen ask NEPRA to reject increase in rates, saying it will dent industrialisation

KARACHI:

Rejecting the proposed increase in security deposit rates by electricity distribution companies (DISCOs), business leaders have asked the National Electric Power Regulatory Authority (Nepra) to address their concerns and oppose the rate hike.

They said it would put a halt to industrialisation and weaken the competitiveness of local industries because the proposed increase, such as the rise in B2 (a tariff category) security deposits from Rs2,010 per kilowatt to Rs54,783/KW, was unbearable.

Karachi Chamber of Commerce and Industry (KCCI) President Muhammad Jawed Bilwani urged Nepra to put the proposed hike in security deposit rates in abeyance until the requisite information was transparently shared with all the relevant stakeholders and an inclusive and meaningful consultation process must also be initiated to ensure that any decision considered the financial constraints of consumers and businesses alike.

In a letter sent to the Nepra registrar, Bilwani said members of the business community, trade bodies and consumers had expressed grave concern over the recent petitions filed by various ex-Wapda DISCOs, seeking an unprecedented increase in security deposit rates. Those proposals, if approved, would place an excessive financial burden on consumers, businesses and industries across the country, he said.

DISCOs have sought Nepra's approval to revise the security deposit rates in accordance with electricity consumption, property size and even market value. Such a drastic increase, without a transparent and well-communicated rationale, will create financial hardships for consumers and businesses already struggling with escalating electricity tariffs and economic pressures. "The proposed rise, such as the hike in B2 security deposits from Rs2,010/KW to Rs54,783/KW, is excessive and financially unviable," Bilwani said.

He cautioned that such an unbearable hike would leave no other option for consumers but to switch to self-generation of electricity via solar technology, which would plunge DISCOs in a deep crisis as their consumers would rapidly diminish.

He said DISCOs including K-Electric had collected security deposits amounting to roughly four times the maximum demand and seven times the average demand from consumers. Bilwani elaborated that K-Electric had collected security deposits from all its consumers to sanction a massive 13,000 megawatts. However, even during peak times, the electricity demand reaches only 3,500 megawatts while under normal circumstances it averages between 2,200 and 2,400MW.

"This clearly indicates how excessively the utility service has exploited the public by imposing unfair security deposits. Similar is the situation with the rest of the country as all DISCOs including KE have sanctioned a gigantic load of 97,800MW whereas the electricity demand all over the country peaks at 23,000MW only."

In another letter to the Nepra registrar, Bilwani said Nepra must direct all DISCOs to conduct an extensive audit of security deposits and consumer contributions.