ISLAMABAD - NEPRA has reserved its judgment on K-Electric petition for granting up to Rs54.30/ unit electricity generation tariff for the company’s six power plants.
The National Electric Power Regulatory Authority (NEPRA) conducted public hearing on the Generation Tariff Petition of K-Electric. During the hearing 23 issues were framed by NEPRA on KE’s petition. The hearing was presided over by NEPRA Chairman Tauseef H Farooqi and it was convened to assess KE’s tariff requests for the remaining useful life of its six power plants.
KE had requested for separate plant wise tariffs keeping in view central economic dispatch and for better visibility and transparency. The proposed tariff is primarily aligned with NEPRA’s practice. KE is currently operating under a Multi-Year Tariff (MYT) regime which will complete its term with the end of the fiscal year. This time the company has filed for separate tariffs for each of its six plants, all of which can run on dual fuel except for SITE and Korangi Gas Turbine Power Stations.
In one of its framed issues, NEPRA had asked KE about whether its requested tariff on Take or Pay basis was justified or not to which Aamir Ghaziani, the Company’s CFO, highlighted that its requested tariff was based on two-tariff structure under which Capacity Purchase Price (CPP) would be based on Take-or-Pay basis while Energy Purchase Price (EPP) will be based on net electrical outputs. He further shared that Take-or-Pay Structure is inevitable to ensure recovery of fixed costs as well as to ensure availability of the plants at reasonable returns.
As per the petition the KE has requested generation tariff from Rs22.76 per unit to Rs40.12 per unit for the RLNG based power generation, and Rs37.31 per unit to Rs54.30 per unit for the HSD/HFO based power generation.
As far as capacity charges of each power plants are concerned, BQPS-I has Rs2.81/ kWh as proposed capacity charges, while BQPS-II has Rs4.12/kWh and Rs4.40/kWh as proposed capacity charges on RLNG and HSD, for KCCP power plant – the proposed capacity charges are Rs4.61/ kWh and Rs4.63/kWh on RLNG and HSD respectively, KGTPS and SGTPS proposed capacity charges of Rs2.48/ kWh and Rs2.89/kWh respectively, BQPS-III unit 1’s proposed capacity charges are Rs3.93/kWh and Rs4.94/kWh on RLNG and HSD respectively, and BQPS-III unit 2’s proposed capacity charges are Rs4.06/kWh and Rs5.11/kWh on RLNG and HSD respectively.
Questioning about whether KE has requested for all its existing plants to be ‘must-run’ in its petition, one of NEPRA’s members asked for more clarity about the matter. Answering to which, KE official responded that KE has not asked for all plants to be on must always run instead it has requested that if any agreement for supply of RLNG was entered with a condition of minimum off take, those plants should be allowed as must run up to the extent of minimum off take.
On a question regarding its past performance, the KE official further elaborated that if the company was not privatised, the tariff for the company could have gone as high as Rs80 per unit. He further added that KE has made a significant turnaround in its operational performance and has reduced its T&D losses from almost 40% to 15% today.
Aamir Ghaziani said that one of the major reasons behind KE’s losses is the absence of cost-reflective tariffs. He added that while IPPs are offered cost of debt, KE is not offered that. Similarly in rest of the power sector, there is dollar indexation, it is not a component in KE’s tariff. To this Chairman NEPRA mentioned that if there were any tariff related decision taken by NEPRA that were not appropriate in the past multiyear tariff petitions, the authority will ensure that legitimate concerns are addressed in the future.
Arif Bilwani, another industrialist, shared that while there is surplus power available on the national level, KE should make efforts to off-take it from there instead of running its own power plants. NEPRA would release its detailed decision over the matter after internal deliberations.