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KE cuts T&D losses but fails to improve power generation: NEPRA chief

By Our Correspondent
January 08, 2023

KARACHI: National Electric Power Regulatory Authority (NEPRA) Chairman Touseef Hassan Farooqi on Saturday lamented the poor performance of DISCOs in terms of transmission and distribution (T&D) and K-Electric’s failure to improve power generation.

Expressing sheer disappointment over the performance of DISCOs across Pakistan including K-Electric, he said that KE, being a private entity was better as compared to other DISCOs as it had drastically brought down T&D losses from more than 40 percent to 15.5 percent.

NEPRA chairman was exchanging his views during a meeting at the Karachi Chamber of Commerce and Industry (KCCI).

Speaking of competition in the power sector, Farooqi said that K-Electric’s exclusivity would come to end by July 2023 and the Competitive Trading Bilateral Contract Market (CTBCM) would allow Karachi’s businessmen to make their own choice for fulfilling their electricity needs. Karachi’s businessmen would be allowed to either set up their own power plants or acquire their power needs from any other producer, he added.

Farooqi said CTBCM provides a roadmap for opening the wholesale electricity market of Pakistan, aiming to provide choice to the bulk power consumers to purchase electric power from the DISCOs or a competitive supplier of their choice.

He said that during the last three years and five months, it has been one of his top most priority to ensure that no imported fuel-based project or no take-or-pay based project was given go ahead. Hence, neither any new license nor tariffs were issued for imported fuel-based projects.

He noted that the industrial support package yielded positive results wherein 25 percent discount was offered to large scale manufacturing and 50 percent discount was given to small and medium enterprises compared to their previous consumption. This, he informed led to accelerating industrial activities and helped achieve an impressive growth rate of 5.8 percent in the first year and 6 percent in the second year.

He said that the power sector despite having installed production capacity, was unable to produce electricity as no funds were available to buy imported fuel for electricity production.

Overall fuel prices have risen by at least eight times in the international markets, whereas rupee has also depreciated to half against dollar. This means that the “overall impact on electricity tariff should have been 16 times higher as 65 percent of the country’s electricity was being produced from imported fuel, but NEPRA has neither raised the tariff by 16 times nor by 8 times and not even by 4 times which deserves to be appreciated”, Farooqi said.

In response to concerns expressed over retrospective liabilities, he explained that as power generation was mostly based on imported fuel, the invoices usually arrive at NEPRA through CGPA after a lapse of two months, which leaves no choice but to charge retrospectively. “However, efforts will be made to expedite the process and reduce the lapse to one month,” he added.

BMG Chairman Zubair Motiwala said that NEPRA should increase power affordability for industries to make them regionally competitive.

Earlier, KCCI President Tariq Yousuf, while welcoming NEPRA chairman, pointed out that circular debt skyrocketed to an alarming level of over Rs4,000 billion.

High T&D losses, recoveries issue, under-utilisation of assets, running defaulters and delays in payment of subsidies have been the biggest contributors to circular debt.

“This huge circular debt is detrimental to the industrial sector and economic growth of the country. It is imperative to take corrective measures and improve the distribution system. Our focus must be to efficiently deal with higher T&D losses and efforts have to be made to bring them down at least to the level of given targets,” he added.