KE presents petition for fuel price variation, other adjustments

K-Electric presented the details of its petition regarding monthly fuel price adjustments and other cost variations at a public hearing organized by the National Electric Power Regulatory Authority (NEPRA) here today.

KE representatives present at the hearing briefed NEPRA about the company’s petition for adjustment in tariff due to variations in fuel price, variation in power purchase price, adjustment in O&M and write-off claims for the period July 2016 to June 2019. Tariff variation is claimed on a monthly and quarterly basis, which is done as per routine by DISCOs all across Pakistan, including KE. KE has not been able to do this since July 2016, because of the delay in the notification of a new multiyear tariff (MYT). KE’s new MYT was notified by the Ministry of Energy (Power Division) on May 22, 2019.

KE representatives briefed NEPRA that the variation in tariff is due to different factors including rupee devaluation, which has resulted in an increase in the price of furnace oil (FO). Furnace oil cost was PKR 27,700 in June 2016, and increased to PKR 69,600 in FY 2019. The other major reason for increase in fuel cost is reduction in supply of natural gas from SSGC, which has resulted in the addition of re-gasified liquefied natural gas (RLNG) in the fuel mix. The cost of natural gas in June 2016 was PKR 613 per MMBTU and with the addition of RLNG in the mix, the cost of gas on comingled basis has increased to PKR 936 per MMBTU in FY 19.

The Company’s representatives also said that delay in tariff notification resulted in accumulation of Tariff Differential Claims, which in turn adversely impacted the company’s cash flows.

KE reiterated at the hearing that following the notification of the latest MYT, all required adjustments and refunds for bank collection charges and meter rent from July 1, 2016 have been made and ToU has been implemented.

Members of the public also participated and expressed their opinion on the matter. NEPRA will give its decision after taking all the inputs into account.

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