tKarachi’s electricity users might get Rs6.62 per unit extra relief in their power bills, in addition to the tariff cut already announced by the government. This came up on Wednesday as NEPRA completed a hearing on a petition asking for a tariff reduction based on the fuel cost adjustment (FCA) for February 2025.
If NEPRA approves the petition, K-Electric (KE) customers could benefit about Rs6.662 billion. KE pushed for a partial adjustment, saying it wants to give financial relief to customers during the hot summer months when power usage and bills increase. Industrial groups opposed this, calling for a full adjustment.
During the hearing, KE CEO Moonis Alvi responded to a question about who should pay for independent verification. He said that it is common worldwide for applicants to cover costs for feasibility studies, environmental checks, and risk assessments while applying for loans for new projects.
NEPRA officials clarified that capacity payments in the power generation tariff are based on plant availability and have always been part of the structure. Earlier, customers saw a single rate, but new rules now break down the tariff for transparency.
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Separate from Tariff Cut
Tanveer Barry, Vice President of the Karachi Chamber of Commerce and Industry (KCCI), said NEPRA should share data on time so stakeholders can raise concerns properly. NEPRA said it met all its timelines and SLAs, providing a timeline as proof.
It stated tha this proposed relief is separate from the government’s overall tariff cut and is an extra benefit from KE. NEPRA will announce its decision after reviewing the data and arguments shared by KE.
During the hearing, industrial groups asked NEPRA to speed up the approval of a multi-year tariff. Rehan Javed said relying on temporary numbers makes long-term planning difficult and slows economic growth.
Stakeholders criticised an agreement with bagasse-based IPPs, saying it unfairly shifts 70% of the rupee depreciation cost to consumers. A power ministry official said consumers earlier paid 100% of this cost, and the new structure gives some relief.
The amendment stated: “foreign O&M: PKR/USD depreciation shall be allowed only to the extent of 70% of the actual depreciation per annum. In case the PKR appreciates against the USD in a year, then 100% of such appreciation shall be passed on to the consumers.”
Speakers said this still burdens consumers, especially since the sugar industry already makes good profits. A separate agreement with nine IPPs will offer Rs1/unit relief to consumers.
The Power Division proposed to revise the fuel cost component of the tariff starting October 1, 2021, setting Rs4,500 per ton with a 5% yearly indexation. Fuel would be measured at 7,000 BTU/kg, and working capital costs would drop by 50% for all bagasse IPPs except Shahtaj.
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