K-Electric to pay back Rs 3bn in additional subsidy


ISLAMABAD: K-Electric would pay back additional subsidy of Rs 3 billion that was “erroneously adjusted” earlier in its power tariff by the National Electric Power Regulatory Authority (NEPRA), as the power sector regulator has now approved collection of Rs 3 billion worth of subsidy from the power utility.
Copy of official documents made available to Daily Times revealed that earlier NEPRA made wrong adjustments in the tariff of K-Electric. But, now it has approved recovery of heavy additional subsidy from K-Electric, which was paid by the Ministry of Water and Power to the power utility after the decision of NEPRA. However, the regulator while admitting wrong adjustment in the power tariff of Karachi Electric Supply Company Limited (KESC) starting from July 2009 to March 2012 was made due to ‘inadvertent error’ has approved collection from the power company.
According to these wrong adjustments in the power price of KESC by NEPRA, 54paisa/unit in the power tariff of domestic consumers who use 1 to 100 units in a month, while 20paisa per unit for consumers to use 101 to 300unit/month, and 40paisa/unit for 301 to 700unit/month was made. Also, 20paisa/unit wrong adjustments in the power tariff of agri/tube well consumers was fixed by the authority.
“Thereafter, while processing the tariff petition filed by Karachi Water and Sewerage Board, it came to the notice of the Authority (NEPRA) that four consumer categories were erroneously adjusted in the KESCL’s SoT,” NEPRA’s decision said. The decision further made crystal the brief facts of the case that the consumer-end-tariff for Karachi Electric Supply Company Limited (KESCL), a licensee of NEPRA, was determined by the Authority (NEPRA) vides determinations dated September 10, 2002 and December 23, 2009; wherein a mechanism for quarterly adjustment was also provided. As per said mechanism, quarterly adjustments for the period July, 2009 to March, 2010 were made by NEPRA vide its decision dated June 30, 2010 whereby KESCL was allowed Rs. 2.79/kWh uniform increase in Schedule of Tariff (SoT), except for the life line consumers consuming up to 50 units per month, on account of variation in different cost components for the period July-2009 to March-2010.
Official at NEPRA, on the other hand, believed that power consumers did not face direct burden beside the said wrong adjustment in the tariff of Karachi Electric Supply Company Limited (KESCL). They said the power company had not sought tariff hike and NEPRA under its act cannot approve three years old adjustment is not possible. the K-Electric would face Rs30crore to 40crore worth economic blow with effect to this decision of collection of Rs3billion, they added.
 “And, even if NEPRA has committed a mistake then why K-Electric be made responsible for it,” an official said. He also said NEPRA is bound to take a decision within 20 days over the tariff plea. Available documents also made it clear that ministry of water & power had paid NEPRA’s approved Rs3billion heavy amount on account of subsidy to the K-Electric. And, hefty payments to the power utility caused additional burden on national kitty.  However, with effect to NEPRA’s decision, K-Electric would pay back the received amount under the head subsidy to the power ministry.
Sources at NEPRA when contacted were of the opinion that the power company (K-Electric) would contact to the higher court to obtain a stay order following the NEPRA’s approval to recover Rs3billion hefty additional subsidy from the K-Electric only if the privately owned power firm has so far not approached to the court in this regards.

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