Karachi – July 28, 2022: NEPRA conducted a public hearing on July 28 over the petition submitted by K-Electric on Fuel Charges Adjustments (FCA) for June 2022. The utility, in its petition for FCA, has sought an increase of PKR 11.38/KWh for June 2022. As per applicable tariffs across the country, fuel adjustment is reviewed every month and is applicable on consumer bills for a particular month.
The major impact on the monthly Fuel cost adjustment of June 2022 is due to an increase in the prices of RLNG, Furnace Oil, and power purchased from CPPA-G. The price of RLNG in June 2022 has increased by 50% from March 2022. The price of Furnace Oil in June 2022 has increased by 42% from March 2022. Meanwhile, the price of electricity from CPPA-G in June 2022 has increased by 74% from March 2022.
During the hearing, Aamir Ghaziani – K-Electric’s Chief Financial Officer, also briefed the regulatory authority about the utility’s strategy to mitigate the impact of rising FCAs in the future. Aamir Ghaziani commented that KE is undertaking various steps to reduce dependence on imported fuel for power production in its service territory. He also said that the utility has planned to add around 1,000 MW of electricity via renewable sources by 2030, which would also be inexpensive. He further stated that KE has allied with Sindh Energy Department (SED) and the World Bank to develop a solar park with an aggregate capacity of 350 MW under the ambit of the ‘Sindh Solar Energy Project’ (SSEP) upon the completion of which, the power would be inducted into KE’s grid via power off-take agreements. Furthermore, KE also has plans to off-take 100 MW from another solar-powered plant based in Balochistan as well as it has 300 MW of energy produced by wind in the pipelines as well.
The FCA is incurred by utilities due to global variation in fuel prices used to generate electricity and change in the generation mix. These costs are passed through to the consumers following NEPRA’s scrutiny and approval and are one-time charges. Consumers also receive a benefit when the cost of fuel decreases.
After the public hearing and scrutiny, the regulator will decide on the request and issue instructions on the period during which these costs can be applied to consumer bills.
K-Electric (KE) is a public listed company incorporated in Pakistan in 1913 as KESC. Privatized in 2005 KE is the only vertically integrated utility in Pakistan supplying electricity within a 6500 km square territory including Karachi and its adjoining areas. The majority shares (66.4%) of the company are listed in the PSX owned by KES Power, a consortium of investors including Aljomaih Power Limited of Saudi Arabia, National Industries Group (Holding), Kuwait, and the Infrastructure and Growth Capital Fund (IGCF). The Government of Pakistan is also a minority shareholder (24.36%) in the company.