Consumers miss out on Rs60bn relief due to Neelum Jhelum closure, debt adjustments

The National Electric Power Regulatory Authority (NEPRA) has revealed that due to power outages, distribution companies (Discos) and K-Electric (KE) Consumers missed out on an expected financial benefit of Rs 60 billion during the first quarter of FY 2024-25. 969 MW Neelum Jhelum Hydro Power Project (NJHPP) and Karachi Nuclear Power Debt Re-Profiling Plant-II (Kanoop).

Nepra officials revealed during the public hearing on Quarterly Tariff Adjustment (QTA) that if these two issues were not there, Rs 60 billion could have been passed on to consumers. Initially, the discos had sought a QTA adjustment of Rs 8.71 billion, which was later revised to Rs 6.47 billion. However, Nepra and Central Power Purchasing Agency-Guaranteed (CPPA-G) concluded that the actual fiscal impact was Rs 1.36 billion, which translates to an adjustment of 13 paise per unit over two months or 9 paise per unit over three months. I was done.

Nepra also criticized DISCOs and K Electric for unscheduled load shedding and alleged that they were manipulating data to reduce losses. Power sales of DISCOs recorded a negative growth of 10.85% during the quarter, with regions such as FESCO, MEPCO, and QESCO reporting significant declines, largely due to the increase in solar power in the agricultural and industrial sectors.

Representatives from Mapco and Fesco highlighted the increasing migration of agricultural tubewells and small scale industries to solar systems, which led to a reduction in demand for grid electricity. Member Law, Amina Ahmed called for a comprehensive study on the impact of solarisation, while Member KPK, Maqsood Anwar Khan suggested privatization or a public-private partnership model for discos to improve efficiency.

CPPA-G reported a 7% rise in electricity consumption in October, partly due to the winter subsidy-neutral package. During the first quarter of the financial year 2024-25, the growth of revolving loans came down to Rs 73 billion as against Rs 243 billion in the same period last year. Overall, revolving credit increased by Rs 11 billion during the first four months of the fiscal year, a significant improvement from Rs 301 billion in the same period of the fiscal year 2023-24.

KE General Manager (Tariff) Ghafran Ahmed acknowledged the impact of solarization but said the growing demand has offset its impact. The participants in the hearing, including observers, suggested deferring the QTA adjustment to the next quarter to provide relief to industries after the removal of Rs 1.74 per unit.

Nepra also sought feedback on issues such as KE’s unscheduled load shedding, write-offs, and the need for a new mechanism to effectively implement the winter package.