Power Division hasn’t entertained KE request

ISLAMABAD: The Power Division has reportedly not entertained a request of Karachi Electric (KE) to withhold current determined notification of tariff by Nepra, aimed at challenging it in the tribunal or High Court, well-informed sources told Business Recorder.

On July 5, 2018, Nepra had rejected a demand of the Power Division to substantially increase seven-year tariff of K-Electric to facilitate additional private sector investment but gave a five-paisa per unit allowance for indexation against recent exchange loss.

Nepra set Multi-Year Tariff (MYT) for KE at Rs12.82 per unit instead of Rs12.77 it had allowed in October last year, allowing an increase of 5 paisa per unit against demand of Rs 3 per unit.

There are indications that a deal between M/s Abraaj Group and M/s Shanghai Electric Power (SEP) is in the doldrums because Nepra approved insufficient tariff on federal government’s reconsideration request. However, there is no official confirmation available with the Ministry on this issue.

The sources said, KE has sent a request to Power Division that notification of recently determined tariff should be withheld as the utility intends to challenge it at an appropriate forum. However, the Power Division argues that it is mandatory for it to notify the tariff within 15-20 days of approval.

“We have prepared the draft notification and submitted to the Minister and Secretary for approval after which it would be sent for publication in the official gazette,’ said an official.

Talking about possible deal on sale and purchase of 77.4 percent stake at a price of $ 1.77 billion in KE between M/s Abraaj and M/s Shanghai Electric, the sources said, there is no progress on whatever was approved by the former government.

In reply to a question, the official said that KE’s management is not ready to share conditions and tariff on which M/s Shanghai is negotiating a deal with M/s Abraaj Group of the UAE.

Answering another question, the official said that he is not aware of any update on this deal adding that since KE has not intimated that the deal is being scrapped it implies that it still exists. The regulator has also allowed T&D losses in tariff control period. In the first year, KE has been allowed 20.90pc loss, 19.80 pc in second year, 18.75pc third year, 17.76pc fourth year, 16.80pc fifth year, 15.95pc sixth year and 15.36pc in seventh year, i.e., 2023.—MUSHTAQ GHUMMAN