Pesco argues in favour of tariff increase

PESHAWAR:

The Network for Consumer Protection (NCP), a non-governmental organisation, has opposed the suggested price hike in power tariffs by the Peshawar Electric Supply Company (Pesco).

The NCP expressed its concerns at a public hearing organised by the National Electric Power Regulatory Authority (Nepra) on Thursday.

The proposed increase of Rs5.74 per kilowatt (Kwh) will raise the price from Rs10.72 to Rs16.46.

Pesco’s Chief Executive Officer Brig (retd) Tariq Sadozai told the bench that the tariff of Rs10.72 set by the government was not sufficient to generate the required revenue. Nepra had set the tariff at Rs13.77 per Kwh for the year 2011-2012 on July 4, 2011, but had failed to generate enough revenue, Sadozai said.  This had led Pesco to file a review motion, which was rejected in March 2012.

He added that the Peshawar High Court had issued a stay order in June 2011 and February 2012 on charging fuel price adjustment. As a result, Pesco could not pass on the fuel price to its customers. “Pesco has only charged a nominal amount of Rs220 million on account of Fuel Price Adjustment for the month of July 2011 and consequently suffered a loss of Rs10 billion during the financial year 2011-12,” read the Pesco tariff petition.

Muhammad Aftab Alam, a representative of the NCP, argued that the petition is unjustified because Pesco is inefficient and has failed to meet the targets set by Nepra in previous years. “It failed to comply with the directions of Nepra in reducing its losses from 36% to 28%.” According to estimates, 1% reduction in losses equals to Rs1 billion in savings for the Pesco, he added.

The level of 28% determined by Nepra for Pesco is also too high, he said. The NCP pointed out that Pesco’s income is projected to increase from Rs41 billion in 2011-12 to Rs47 billion in 2012-13. “This huge increase shows lack of seriousness of the petitioner to improve efficiency,” he said.

The inefficiency of Pesco in recovering its dues from consumers is curtailing its capacity to pay for electricity to the Central Power Purchase Agency.

Published in The Express Tribune, September 28^th, 2012.