The National Electric Power Regulatory Authority (Nepra) expressed concerns on Thursday regarding negotiations with Independent Power Producers (IPPs) that could hinder investment in Pakistan. During a public hearing about K-Electric’s provisional Fuel Charges Adjustment (FCA) for September 2024, Nepra members highlighted these issues, which were reported by the media.
K-Electric is seeking a reduction of 16 paisa per unit to return Rs 247 million to its customers, along with General Sales Tax. During the session, numerous participants commended NEPRA Member Mathar Niaz Rana for his dissenting opinion on K-Electric’s generation pricing. The hearing also covered the recent cancellation of contracts for five IPPs and ongoing discussions with other energy providers.
Negotiations involving the Energy Task Force, led by Minister for Power Sardar Awais Khan Leghari and including other prominent officials, were also scrutinized. When contract terminations were brought up, NEPRA members Amina Ahmed and Rafique Ahmad Shaikh voiced their concerns candidly. Ahmed pointed out the lack of a coherent government policy regarding IPP contracts, expressing disappointment over the circumstances surrounding them.
Shaikh expressed frustration over personal remarks directed at NEPRA members during the hearing and supported Ahmed’s concerns about the treatment of IPP investors. He questioned the underlying intentions toward the power sector and criticized accusations of collusion with K-Electric for consumer exploitation.
K-Electric has noted its displeasure with Nepra’s two-month delay in announcing the FCA. Shaikh indicated his intent to limit speaking opportunities to business community representatives, showing discontent with political involvement in the discussions. He also directed NEPRA’s staff to respond to inquiries raised by participants regarding K-Electric’s practices.
Representatives, including Tanveer Barry from the Karachi Chamber of Commerce and Industry, criticized the FCA for being unfair to Karachi consumers, pointing out a significant disparity in adjustments compared to Discos. They urged K-Electric to boost its renewable energy usage to reduce tariffs and stimulate industrial growth.
K-Electric’s Director of Finance, Ayaz Jaffer, noted that the company’s FCA rates have been consistently lower than those of Discos in recent years, attributing high fuel costs to the lack of local gas supplies. He suggested that if local gas became available, K-Electric could see fuel costs decrease significantly. He also mentioned a decline in K-Electric’s overall production due to economic conditions but hinted at an expected boost in demand with the arrival of winter.
