The government of Pakistan has a 24.36% shareholding in KE and is also responsible for the overall situation of electricity and energy in Pakistan. The Nepra has also framed certain issues for hearing regarding GoP reconsideration requests in the matter of K-Electric which are as follows: (i) in the matter of K-Electric as well as Discos, the Authority has determined the tariff based on recovery targets with actual write-offs duly allowed. And whether this request of the GoP to consider recovery loss of KE based on recoveries of 87.6 per cent is justified in the interest of consumers; (ii) considering spirit of privatisation of KE (KESC) and earlier correspondence of January 27, 2017 from Secretary Water and Power whether this reconsideration request for a performance based tariff structure similar initial MYT( 2002) is justified wherein efficiency gains in power generation as well as in transmission and distribution are to be retained by KE; (iii) in the matter of all Discos, Wapda hydel and NTDC, the Authority allowed RAB based on the written down value of fixed assets. Whether this request of the government to work out the RAB of KE based on capital employed (sum of equity plus debt) is justified; (iv) the tariff of IPPs, Gencos, Discos and NTDC: are all based on debt: equity ration wherein in any equity over 30 per cent is considered as debt. Whether this request of government to calculate KE's tariff based on actual debt: equity considered over the allowed threshold is justified; (v) Nepra has already allowed KE a comparable return for its generation, transmission and distribution business. Whether this request of government to consider higher return to KE with US$ indexation also allowed on transmission and distribution business is justified; (vi) whether the determined MYT has any significant adverse implications on KE's consumers and; (vii) whether will the determined MYT turn KE into loss making?
Raising its concerns, KE management said the determined MYT will have significant adverse implications on KE and consequently on the consumers of Karachi. The determined MYT will turn KE into a loss-making entity with a significant cash shortfall over the next seven years. This will make the company's operations unviable, un-bankable, unsustainable, and impair KE's ability to undertake much-needed investments in generation, transmission and distribution which would lead to significant increase in load-shedding and technical power outages.
Copyright Business Recorder, 2017