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Ministry sticks to demand for probe into KE overbilling

ISLAMABAD: The controversy between the power ministry and the National Electric Power Regulatory Authority (Nepra) on alleged over-billing worth Rs62 billion to people of Karachi deepened on Thursday when the ministry directly accused the regulator of perpetually siding with privatised power utility to the disadvantage of consumers for times to come.

“The use of unprofessional language in the fore-mentioned communication (letter written by the Nepra registrar) is regretted,” wrote the power ministry to the regulator on Thursday saying Nepra was trying to take refuge behind “national interest” instead of addressing core defects identified in the K-Electric’s power determination.

The acrimonious exchange of words in public between the two key power sector stakeholders comes at a time the KE is in the process of changing hands from a UAE-based Abraaj Group to China’s Shanghai Electric following inability of the KE-power ministry and Nepra to resolve the power purchase agreement that expired early last year.

The ministry, this time wrote to the regulator, through a section officer, instead of secretary power himself, saying the ministry neither sought nor required a reply but wanted Nepra to account for deficiencies, inaccuracies and anomalies identified in the upcoming tariff determination of KE.

“Surprisingly, however, Nepra’s first reaction was to give KE a clean chit on its own earlier finding of 2014 that KE was over-billing consumers. This was followed by a long-drawn explanation amounting to an admission that Nepra has not fulfilled its regulatory responsibility towards the KE consumers in fiscal year 2015 and 2016 by delaying the decision for almost two years, despite having had adequate opportunity in around eight quarterly instalments,” the letter provided to Dawn said.

The ministry said the national interest would have better served if the regulator had provided timely relief to KE consumers instead of ensuring that massive profits are posted to KE’s financials for two years, thereby making recovery of this amount difficult. “If highlighting this issue amounts to a ‘conspiracy’ against Nepra’s credibility, then it rests only on the undisputed evidence of collusion at the cost of one of the largest electricity consumer bases in the country”.

The ministry went on to add that so-called seeds of discord were also sown when the regulator turns a blind eye towards the interests of consumers of a particular area, and national harmony would in any case be better served if highlighted issues were to be addressed to provide judicious relief to people across the country.

The ministry pointed out that Nepra had set Rs7.14 per unit in 2008 when oil prices were way up and almost doubled now when oil prices were at the lower extreme. “This is by any standards a legally and financially unjustifiable and disproportionate increase in tariff”.

The ministry also blamed the regulator that fundamentals of Multi-Year Tariff (MYT) should have been kept unchanged but questioned why KE was allowed to have revaluation of assets that practically allowed it higher return on assets instead of benefiting the consumers through tariff reduction.

It also wondered how the KE’s failure to meet 15pc target losses was rewarded through higher profits which can have spillover effects to higher benchmarking for future MYT determinations and continued losses to consumers for years to come. This was on top of inadequate accountability of KE in disastrous performances in heat waves of 2015 and 2016 — a proof of inadequacy of system improvement and Nepra’s leniency.

It, therefore, demanded that in the upcoming MYT the KE’s failures of last 10 years should not be borne by the consumers in coming years. “The benefits of Clawback Mechanism, which has been delayed since 2014, also need to be determined at the earliest possible so that consumers are rightfully given their lawful and overdue benefit in electricity invoices”.

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About TAUQEER RIAZ Utmanzai (1897 Articles)
Broadcast Engineer/Journalist/Columnist and Social activist. --------------------------------------------- Follow on Twitter: https://twitter.com/tauqeerriaz On FB:www.facebook.com/tauqeerkhanutmanzai.
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