KARACHI: National Electric Power Regulatory Authority (Nepra) Chairman Touseef Hassan Farooqi has expressed disappointment over the performance of the distribution companies (DISCOs) across Pakistan, including K-Electric (KE), a statement said.

The KE, being a private entity was better, compared with other distribution companies because of its efforts to drastically reduce the transmission and distribution (T&D) losses from over 40 per cent to 15.5 per cent but they have failed to improve the power generation, he remarked, while exchanging views at a meeting at the Karachi Chamber of Commerce and Industry.

“Technology and competition were the only way forward. Technology was already there but the competition was missing. As the KE’s exclusivity would come to an end by July 2023, the Competitive Trading Bilateral Contract Market (CTBCM) would allow Karachi’s businessmen to make their own choice to fulfil their electricity needs either by setting up their own power plants or by acquiring from any other power producer,” he added.

The CTBCM provides a roadmap to open the wholesale electricity market of Pakistan, aiming at providing the choice to the bulk power consumers to purchase electricity from the distribution companies or a competitive supplier of their choice, Farooqi said.

For him, during the last almost three-and-a half months, it has been one of his top most priority to ensure that no imported fuel-based project or no take-or-pay-based project was given a go ahead; hence, neither any new licence nor tariffs were issued for imported fuel-based projects.

“It is my utmost effort to bring in green revolution in Pakistan, which was very important for our country, as the entire world nowadays seriously looks at how green you are,” he added.

According to him, the industrial support package yielded positive results; wherein, 25 per cent discount was offered to the large-scale manufacturing and 50 per cent discount was given to the Small and Medium Enterprises (SMEs), compared with their previous consumption.

This led to accelerating the industrial activities and helped achieve an impressive growth rate of 5.8 per cent in the first year and 6 per cent growth in the second year.

At present, Pakistan’s power generation is going through worst situation, as despite having installed production capacity, the country is unable to produce electricity due to the unavailability of to buy imported fuel for electricity production, he added.

The overall fuel prices rose by at least eight times in the international markets, whereas the rupee also depreciated to half against the dollar, meaning the overall impact on the electricity tariff should have been 16 times higher, as 65 per cent of the country’s electricity was being produced from imported fuel but Nepra should be appreciated for not raising the tariff.

Regarding retrospective liabilities, he said as the power generation is mostly based on imported fuel, the invoices usually arrive at Nepra through the cumulative grade point average (CGPA) after a lapse of two months, which leaves no other choice but to charge retrospectively. However, efforts will be made to expedite the process and reduces the lapse to one month.

Regarding fixed charges being collected from closed industries by KE, the Nepra chairman said that under the relevant rules, all such closed industries have the option to apply for disconnection, which would save them from fixed charges.

The KE is liable to reconnect them anytime upon receiving an application from such an industry without seeking any security deposit and system development charges.

Referring to Nepra’s mission statement, Motiwala stressed that the power regulator has to bring the affordability of electricity for industries to such an extent that they can compete with their regional competitors because the current electricity tariff was exorbitantly high, compared with India, Bangladesh, Sri Lanka, Vietnam and Cambodia.

“In the energy sector, the electricity tariff was 22 per cent lower in Bangladesh, while in gas, they are around 30 to 32 per cent cheaper than Pakistan. For this reason, we are unable to compete and enhance our exports,” he said, adding that if the energy tariffs were brought at par with Bangladesh, Pakistan’s exports will not be less than $60 billion.

“If the government has entered into agreements with the IPPs to buy electricity at exorbitantly high tariffs, it is not the industries’ fault, yet we are being penalised in the shape of high cost of doing business and as a result, we are unable to export more.”

Motiwala also stressed that the industries should not bear the entire burden of the line losses and pilferages and must be segregated because the overall burden of the line losses and pilferages raise the cost and was tantamount to making compromises over Pakistan’s progress and prosperity.

Therefore, the industrial electricity tariff should be calculated, according to the industries’ line losses and pilferages.

According to him, during the last two years, a new trend has emerged; wherein, a retrospective liability is created and collected from the current occupier consumer, which was unconstitutional, as Pakistan’s Constitution does not allow retrospective levies, punishments or collections; hence, Nepra needs to review it.

The BMG chairman noted that Pakistan has the production capacity of around 23,000MW, while another 1,300MW would soon be added to the system from Thar and the electricity generation from solar, wind and hydel resources have also been rapidly increasing.

“In this scenario, it was highly unfair to charge peak hours tariff. If I would have been a policymaker, I would rather reduce the electricity tariff by 50 per cent to those consumers who stop using gas and switch to electricity for carrying out their production activities as the country faces dire gas shortages.”

“We were already paying capacity charges for electricity, which must be given to industries at 50 per cent discount so that they could be encouraged to switch from gas to electricity.”

According to a government policy, those units who utilise more electricity than the previous year would be subject to 50 per cent lesser price, which was being given to the industries across the country, except those in the K-Electric territory.

Earlier, KCCI President Tariq Yousuf welcomed the Nepra chairman and said that the circular debt skyrocketed to an alarming level of over Rs4 trillion. High transmission and distribution losses, recoveries issue, underutilisation of assets, running defaulters and delays in the payment of subsidies have been the biggest contributors to the circular debt.

“This huge circular debt is detrimental to the industrial sector and economic growth of the country. It is imperative to take corrective measures and improve the distribution system. Our focus must be to efficiently deal with the higher T&D losses and efforts have to be made to bring them down at least to the level of the given targets,” he added.

Businessmen Group Vice Chairman Jawed Bilwani, KCCI Vice President Mohammad Haris Agar, former president Muhammad Idrees and KCCI Managing Committee members were also present on the occasion.