ISLAMABAD-NEPRA has linked the approval of the K-Electric investment plan worth Rs484 billion with the performance review of the previous Multi Year Tariff and said that the regulator is ready to listen to any argument regarding handing over KE’s generation to government.
In a public hearing on KE’s investment plan envisaging investment in its transmission and distribution system for 7-year period (FY24 to FY30), organised by NEPRA, Jamat-e-Islami has opposed the K-Electric Investment Plan and said that how Nepra can allow a huge investment of Rs 484b to a defaulter company and asked the regulator to reject the plan. Hafiz Naeem, Amir Jamat-e-Islami Karachi, said that JI is the biggest stakeholder of Karachi and argued that the company is defaulter of Rs 889b to various government entities. “I don’t know how NEPRA can allow the investment plan to a defaulter company,” he asked.
He said that the regulator should also review actualization of the investment of $361 million that KE had committed back in 2009. K-Electric in not self sufficient in electricity generation even after 18 years of the privatization of the company, Hafiz Naeem added. The company is getting electricity and gas from the federal government without any agreement, he maintained. He asked chairman NEPRA that don’t tell us that what will happen to Karachi without KE, as a regulator it is your responsibility to manage it. Chairman NEPRA responded that “They are ready to listen to any argument regarding handing over generation part of the KE to government”.
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Another participant said that KE has become a hurdle in the performance of other Discos. KE is generating three times expensive electricity than other Discos. They are doing 12 hours loadshedding. He asked NEPRA to get rid of KE and allow to bring new companies. He pleaded not to renew the KE’s license. K-Electric had submitted an investment plan envisaging an investment Rs 484.079b in its transmission and distribution system, in next seven years (2023-30), to National Electric Power Regulatory Authority (NEPRA). During hearing, the management of K-Electric (KE) has pledged to make 95 percent of Karachi city free of loadshedding by bringing improvement in its network during next seven years. It also plans to bring down transmission and distribution losses to 12.8 percent till 2030 through its investment plan. By 2030, KE aims to take city’s loadshedding exemption percentage from 75% as of 2022 to 95 percent till 2030, KE management informed the regulator.
CEO K-electric Moonis Alvi said during the hearing that this plan was being conceived cognizant of the imminent changes in the power sector such as the liberalization of the market. He further said that the investment plan is being conceived to maintain a balance between affordability, availability and sustainability of power supply which is considered today’s dilemma. NEPRA inquired about the future plans to address challenges such as loadshedding and theft. KE shared details of investment and projects being undertaken to reduce losses in the system and provide stable power supply to a growing number of customers. Implementation of Aerial Bundled Cables and technology such as Advanced Distribution Management System were cited as measures that would further reduce transmission and distribution losses.
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Several intervenors inquired about KE’s plan to add generation to meet Karachi’s future demand. Presentation revealed KE intends to reduce generation on thermal power plants from approximately 90% to 50%. Compared to previously applied tariff, the current petition has provision of review mechanism every 2 years. KE management explained that this is to allow flexibility and make any changes to the scope of investment to align it with the macroeconomic situation at the time. Moin Fudda, Chairman of Board of Directors CDC, stated that filing for a non-exclusive license is a positive step and should be acknowledged.
Regarding generation investment the company said that based on existing plans, KE plans to procure power from external sources, including IPPs with equity stake, and doesn’t plan to add any generating plant in its existing meet. K-Electric had submitted seven years investment plan and losses assessment for tariff control period to Nepra. As per the plan the company envisaged an investment of Rs 280.915bn in the projects for expansion/improvement of transmission system. For growth an investment of Rs 140.751b, for system improvement/reliability Rs 84.133b, NTDC and IPPs interconnection Rs 52.860b and reactive power management &loss reduction an investment of Rs 3.171bn has been proposed. Regarding improvement/expansion of distribution system the company plans to invest Rs 184.650b within next seven years. The loss reduction component of the distribution projects will cost Rs 64.662b, followed by Rs 40.496b for maintenance, Rs 37.105b for growth, Rs 25.858b for safety and Rs 16.529b for new technology.
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An amount of around 67.83 billion will be invested for loss reduction and Rs 64 billion to be invested for maintenance.KE has also pledged Rs26.21 billion on account of technological advancements and Rs 18.51 billion to be invested on account of IT & Cybersecurity. KE also plans to increase recovery of bills under this investment plan. During hearing Nepra official also raised questions over the investment made in the past. KE officials said that they were requesting actual indexation of dollar rather than based on assumption. Member NEPRA raised question about dollar indexation KE in MYT, saying that in the past NEPRA had played a role in dollarization of economy by allowing indexation in dollar to IPPs. Nepra officials also raised questions about impact of investment on the consumers. Therefore, they said that consumers would benefit from the tariff set by the power regulator even if KE is unable to achieve the targets. However, the point was contested by Member NEPRA KP, saying that how the consumers will get benefit if the target of reducing losses has not been achieved? NEPRA has completed the hearing and said that the regulator will review the performance of the KE under the existing MYT which was due to expire on June 30, 2023.
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