KARACHI, Jan 24: Karachi Electricity Supply Corporation consumers are set to face yet another hike in tariffs, as the KESC has sought adjustments from the government based on the variation in fuel and power purchase prices.

In addition, load-shedding is also set to continue, as Kanupp is to go offline for about a month for maintenance, reducing the utility’s generation capacity by 80MW.

The Abaraj-led management of the KESC has curtailed its own generation from the Bin Qasim plant to save on fuel costs, despite the government’s strict directives to the contrary.

As a result of the closure of Kanupp, and the continuing unavailability of supply from the DHA plant, the utility is facing a shortage of over 300MW. This shortage is overcome by the three spells of load-shedding every day, each lasting at least an hour and a half.

According to a KESC spokesperson, the utility faced a 125MW shortage on Saturday afternoon, resulting in spells of load-shedding. She said the total demand of electricity in the city was around 1,700MW.KESC consumers, meanwhile, complained of severe voltage fluctuations on Saturday. They also complained of the “indifferent attitude” of KESC officials.

With the KESC failing to provide electricity consistently, reports that the National Electric Power Regulatory Authority (Nepra) has recommended a Rs1.85/unit hike in the electricity tariff for the KESC have shocked citizens in Karachi.

Nepra has allowed the utility to raise its prices due to high fuel costs, and has sent its determination to the government. The Abaraj-led management is also demanding that the government pay the utility Rs2.5 billion in subsidies. KESC consumers are therefore expecting another round of inflated bills.

The KESC claimed that the variation in fuel and power costs worked out to a total of Rs20.237 billion, or 184.80paisa/kWh. The KESC has also noted that there is a dispute over the cost of power purchased from the National Transmission and Dispatch Company (NTDC), and that the company applied the previously agreed upon rate of Ps369/kWh.

The KESC has requested that the current quarterly adjustment in tariff be made without the application of a four per cent cap.

The company has also sought adjustment of loss in revenue amounting to Rs6.754 billion. According to the KESC, it suffered the loss due to the four per cent cap in quarterly tariff adjustments.

Having considered the issue, Nepra decided to allow the KESC to disregard the four per cent price cap. The total variation in cost due to fuel and power prices will now be adjusted into the KESC tariff. As far as the revenue adjustment was concerned, Nepra noted that the unadjusted amount will be adjusted in the future.

Nepra is to verify the data submitted by the KESC before authorising its tariff increase.

A committee constituted for this purpose visited the KESC on Jan 9 and 10, and has submitted a report detailing some discrepancies and weaknesses in the KESC’s system of data reporting.

According to information provided by the KESC, the variation in cost for the quarter July-September 2008 due to fuel price worked out to be Rs10.404 billion. Incorporating the leftover (unadjusted) amount of Rs3.191 billion from previous quarters, the total variation in cost due to fuel price works out to Rs13.595 billion, or 124.16 Paisa/kWh.

The variation in cost due to power purchase price for the current quarter works out to Rs14.434 billion. The KESC had a leftover (unadjusted) amount of Rs28.023 billion.

The total variation in cost of purchase of power, therefore, amounts to Rs42.457 billion. Out of this total amount, Rs35.82 billion (327.12 Paisa/kWh) pertains to the purchase of power from the NTDC at a marginal cost rate for the period July 2007 to September 2008, while the balance amount of Rs6.637 billion relates to the purchase of power from other sources (IPPs and others).

Nepra says that the dispute between the NTDC and the KESC over past arrears on the basis of a marginal cost rate is under the consideration of a committee. It has therefore been decided not to adjust the Rs35.820 billion pertaining to accumulated arrears of the KESC on a marginal cost basis till the resolution of the issue by the committee. The KESC, however, is allowed to adjust the balance amount of Rs6.637 billion pertaining to the purchase of power from sources other than the NTDC.

In view of the above, the overall approved variation in cost for the current quarter, inclusive of the leftover (unadjusted) amount of the previous quarters, works out to a total of Rs20.232 billion, or 184.77 Paisa/kWh which is being adjusted in the current quarterly adjustment in tariff for July-Sep 2008.

In order to compensate the KESC on account of variation in the fuel price and the cost of purchase of power for the current quarter (July-Sept 08), Nepra has decided to allow a uniform increase in consumer end tariff for all consumer categories by 185.0 Paisa/kWh (Rs1.85/kWh), except for lifeline consumers consuming up to 50 units per month.

The authority has recommended a modification of the KESC tariff to the federal government in accordance with the variation in cost of fuel and power purchase for the quarter July-September 2008. For this purpose, a new schedule of tariffs has been intimated for notification in the Official Gazette in accordance with the provisions of section 31(4) of the Regulation of Generation, Transmission and Distribution of Electric Power Act (XL of) 1997, read with Rule 6 of the NEPRA Tariff Standards and Procedure Rules, 1998.

The KESC’s spokesperson has stated that the power utility had not yet received any information or intimation about a rise in tariffs for KESC consumers.