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ISLAMABAD: After getting hundreds of billions of rupees in subsidy from the government, to offset the impact of its high energy cost, K-Electric has once again sought the NEPRA nod for the transfer of its Rs 68.85 billion losses to the government or electricity consumers.
In their written comments and during public hearing on the KE’s petition for transferring the burden of Rs 68 billion to the government or consumers, 99 percent of the consumers have opposed the move and requested National Electric Power Regulatory Authority to reject the request.
NEPRA has conducted hearing on annual claims between FY17 and FY23 of unrecoverable dues of Rs 68 billion against defaulters filed by K-Electric. The hearing was chaired by Chairman NEPRA, Waseem Mukhtar along the members of the authority.
An official of NEPRA said that KE initiated legal action against cases against the defaulters of more than Rs 10 million, and Res 250 million got stuck due to unsuccessful court proceedings.
However, no legal action has been initiated against the defaulters of Rs less than 10 million which accounts for Rs 41.65 billion, he said and added that Rs 24.36 billion worth of written off claims are from before July 1, 2016.
The KE official said that these write-off claim amounts have been unrecoverable despite best efforts against defaulters including multiple disconnections, engagement with specialized recovery agencies, and area specific initiatives etc.
The hearing was informed by the KE’s CFO Aamir Ghaziani that since the start of the tariff control period (i.e. FY 2017) and upto June 2023, KE’s total billed revenue to Non-Public Sector Consumers is PKR 1.73 Trillion and KE collected Rs 1.60 Trillion there against.
Write-off claim is around 3.9% of revenue billed to Non-Public sector consumers during FY 2017 to FY 2023, and is lower than KE’s actual recovery loss of 7.1%
“We have requested write-off claims from 2017 to 2023, as 100% bill collection is not possible due to law and order and slums,” the official said. K Electric has made a lot of efforts to recover the bills, he added.
K Electric actually incurred a loss of Rs 119 billion, on account of less recoveries, however, the entire loss
worth of claims could not be written off due to Nepra regulations, he added.
Representative of the K-Electric told the hearing that unlike XWDISCOs, as a private utility KE has no contribution to the national circular debt.
Disallowing legitimate claims will therefore directly impact KE’s cashflows, affecting our capacity to fulfill plans to drive infrastructural upgrades for enhanced power supply to Karachi.”
NEPRA asked that why no legal action was taken against those who have less than Rs 10 million dues?
Member NEPRA Rafiq Shaikh asked that who will bear the burden of the consumers who are not paying their bills?
The KE official said that this amount can be made part of the tariff. Being part of the tariff means other consumers will pay, member Nepra Rafiq Shaikh questioned.
The KE official however, said that the burden of write off claim can also be taken as a subsidy by the federal government. The federal government has a budgeted subsidy of Rs 88 billion and Rs 68 billion write-off can be adjusted there, the KE official said.
In the hearing, the stakeholders have also rejected the claims. The representative of Jamat-i-Islami said that the government should stop rewarding K-Electric.
While rejecting Rs 68 billion claims, he argued that these are fake and bogus claims.
Interestingly, instead of third party auditor, the claimed Rs 68 billion was audited by the KE’s own auditor.
Accepting these claims will be a great injustice to the consumers, the of Jamaat-e-Islami said.
He said that KE is completely silent on the return of Rs 54 billion to the consumers.
Another consumer of KE said that it has become impossible to do business in Karachi. The industrial consumer of Karachi was billed Rs 60 per unit in November, which was much higher than the per unit cost charged from the consumers of LESCO and FESCO, he said.
He claimed that 100s of factories have been shut down due to the cost of electricity, while 100000 consumers have been laid off from the factories.
Karachi customers are being charged a circular debit collection surcharge, he said.
He said that industrial consumers of Karachi rejects further increase in tariff in terms of write-off-claims or otherwise.
He said that imposing additional surcharge on the consumers of Karachi will create law and order situation in the city.
Another consumer said that what was the purpose of privatization of KE? Has it been achieved?
He said that KE is generating expensive electricity which is being subsidized by tariff differential, by the Federal Government, to the consumers
The government is funding the high generation cost of KE electricity and had paid a subsidy of over Rs 350 billion since its privatization.
He said that KE has earned recorded margin from 2019 to 2022, then why it is burdening the government exchequer or the consumers for its losses.
