The second day of a two-day hearing on K-Electric’s (KE) review motion was held on 14th July 2017, at a local hotel in Karachi. Organized by NEPRA, the proceeding was attended by businessmen, renowned professionals, philanthropists and civil society. Speaking on KE’s review motion, representatives of industrial associations, appreciated KE’s decision of granting 100% load-shed exemption to industries and stated that the previously allowed performance based structure led to operational improvements in KE. They added that a performance based structure is ideal in case of a Vertically Integrated Utility (VIU) to enable it to continuously invest across the value chain and therefore NEPRA should consider the same for KE.
Commenting on the likely implications of the new tariff presented by KE in its review motion, stakeholders deliberated upon the importance of investment for Karachi’s power infrastructure and stressed that KE’s tariff should ensure the viability and sustainability of the company so that it may undertake the required investments to strengthen its infrastructure and better serve the consumers.
The stakeholders also urged NEPRA to carefully assess the possible repercussions of the tariff, as lack of investments in the given scenario would have far reaching implications, particularly for the consumers including increased load-shed. They added that it is critical that NEPRA objectively assesses these implications and revises the tariff so that consumers may benefit and the economy may prosper.
Addressing the concerns and observations put forward by the audience, Aamir Ghaziani, Director Finance & Regulations at KE, reassured the utility’s commitment towards meeting the growing power demand and providing reliable and uninterrupted supply to its consumers for which a sustainable tariff would be essential. However, the determined tariff 2017 neither fully covers the costs nor allows adequate returns, resultantly will turn KE into losses, and impair KE’s ability to invest. KE therefore, requested NEPRA to ensure that the tariff allows for sustainable operations, offers reasonable returns and enables execution of KE’s investment plan.