Worries arise as KE applies for a 20-year license

On Tuesday, K-Electric appealed for a non-exclusive distribution and supplier license for the next two decades. This request raised concerns among certain consumers regarding the assurance of affordable and sustainable electricity, particularly for lower-income groups. Questions were also raised about the safeguard mechanism associated with such a license.

The National Electric Power Regulatory Authority (Nepra) conducted a public hearing to address K-Electric’s petitions for distribution and supplier licenses, as its exclusivity license expired the previous year. Suggestions were made during the hearing for conditional licenses spanning a few years rather than the requested two decades.

The panel, led by Nepra Chairman Waseem Mukhtar, which included all four provincial members, deliberated on issues such as load-shedding, the accuracy of information provided by K-Electric, and the performance of its outdated generation plants.

K-Electric proposed distribution and supplier licenses for its service territory, encompassing Karachi, Dhabeji, Gharo in Sindh, and Balochistan’s Hub, Bela, and Vinder regions. Stakeholders, including representatives from Karachi’s industries and the general public, attended the hearing. KE’s team, represented by CFO Aamir Ghaziani, CDO Fawad Gilani, and CMO Sadia Dada, addressed queries posed by the regulator.

The team claimed a capital expenditure of approximately Rs544 billion ($4.4 billion) had been invested in enhancing power supply in Karachi, resulting in the addition of 1,957 MW of generation capacity and a 12-percentage-point improvement in fleet efficiency, from 30% in 2005 to 42% in 2023.

Discussions primarily focused on tariffs and the pursuit of tariff benefits for industries in Karachi. Some participants expressed satisfaction with the network and services, while others suggested the need for improved strategies.

In response to inquiries about service reliability, the company highlighted investments in IT and technology-based interventions to modernize infrastructure and enhance service delivery. Initiatives included the use of a Geographical Information System (GIS) and the deployment of 60,000 smart meters for better visibility of power consumption trends.

Aamir Ghaziani affirmed the company’s commitment to providing high-quality services, citing an upcoming investment plan of Rs484 billion and the proposed addition of over 1,200 MW of renewable energy. He attributed Rs40 billion in financial losses during 2022-23 to higher borrowing costs, lower energy sent out, fuel costs, and reduced recovery due to inflation.

Consumer representatives supported KE’s petitions, proposing that the power utility should refrain from disconnecting electricity to private hospitals in high-loss areas. They suggested implementing load-shedding on pole-mounted transformers (PMT) rather than shutting down entire feeders.

Arif Bilwani questioned the proposed investment statistics, reductions in technical and commercial losses, and proposed generation sources. He recommended Nepra grant distribution and supplier licenses to KE for a limited period subject to conditions that should be reviewed before any extension.

Tanveer Barry, Vice-President of the Karachi Chamber of Commerce and Industry, urged the withdrawal of all stay orders by KE before granting a license, including those related to Nepra’s decision to pay Rs43.6 billion as per the claw-back mechanism to consumers.

He highlighted reports of the government intending to sell excess electricity to Central Asia in winter, while local industries awaited their winter package. Although 70% of Karachi was exempt from load-shedding, he acknowledged that 30% still faced load-shedding, and not all of them were defaulters or thieves.

Imran Shahid, representing Jamaat–e-Islami, strongly criticized K-Electric for its perceived poor performance. He recommended taking action against Nepra’s legal team for not vacating stay orders.

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