Industries: Nepra approves extension of concessional tariff until 30

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ISLAMABAD: The National Electric Energy Regulatory Authority (Nepra) approved the extension of the concessional tariff of Rs12.96 paisa per unit for the industry at peak times across the country until June 30, 2021 to the request of the Energy Division and Karachi Electric. However, a proposal to automatically incorporate the extension into the industrial package into the then current pricing structure of Disco and K-Electric was rejected.

The Ministry of Energy (MoE) had submitted that a review would be carried out by March 31, 2021, for the continuation or otherwise of the package beyond April 2021. The MoE indicated that the industrial support package resulted in growth ranging from 4.29% in November 2020 to around 17% in January 2021. The Ministry of the Environment further provided the following breakdown of growth in terms of peak and off-peak hours, showing greater growth during peak hours.

The cumulative budget subsidy was around Rs 26 billion for the package for the period May 1, 2021 to June 30, 2022, with the timely monthly disbursement by the Finance Division based on actual consumption. The financial impact of the incentive applicable until April 30, 2021 has been calculated at Rs 14 billion.

On May 26, 2021, during a public hearing in Nepra, the Ministry of the Environment stated that the real economic impact of the industrial package requires detailed analysis / work, however, according to the information available, it is clear that the cost of electricity is directly related to GDP growth. The Ministry of the Environment has further indicated that a joint study will be carried out with the PIDE to assess the real impact of the package.

On the issue of expected future benefits, the Ministry of the Environment indicated that in the future, based on existing trends, growth of around 24% for nightclubs and around 40% for the K system -Electric is expected over the next year.

On the matter, the representative of NPCC argued that growth has been widely observed in Fesco, Mepco, Lesco and Gepco due to this set, as industrial consumption is largely in these areas.

It was further explained that although a sufficient energy balance is available during the winter months, some constraints would nevertheless be observed during the summer. According to the MoE, the main growth in load has been at Fesco, Mepco and Gepco, which can lead to load management of around 800 MW at Fesco, in the worst case, due to grid overload and the non-commissioning of the Trimmu RLNG power plant, which was delayed by about a year. The Ministry of the Environment added that the CCoE, while approving the extension of the industrial package, was informed of load management issues and that all permutations and scenarios were discussed there.

At the hearing, K-Electric argued that there would be no load management in its system due to the implementation of the industrial package, as the additional demand would be handled by the use of its own fleet as well as additional use of the national network.

The Authority expressed serious concerns regarding the load management proposed by the MoE / NPCC and observed that this was neither in the interest of consumers nor in the interest of the system as a whole, in particular in the fixed cost recovery context. Taking this into account, a firm plan can be prepared ensuring minimal impact on consumers with fair treatment.

The Authority observed that the spirit of the FAI was to encourage industrial consumers, for their additional consumption, therefore, the exclusion of small consumers is contrary to the spirit of the decision. Therefore, the package should be extended to all industrial BI consumers, including those who do not have a ToU measuring device.

The Ministry of the Environment also argued that with the extension and abolition of the peak tariff for industrial consumers, the flat rate for additional consumption would become applicable to all hours of the day. In addition, the Department of the Environment has requested that any federal government decision to extend / abolish the current tariff regime based on time of use for future iterations can be automatically incorporated into the tariff structure. then in force discos, without the need for any additional motion. , until the applicability of the industrial support package.

In view of the discussions, the Authority, in its decision, said it had no objection to approving the MoE and KE’s proposals for extending the peak tariff for industrial consumers until June 30, 2022. , both for disco and K-Electric consumers. , as this has no impact on the rate determined by Nepra, since the federal government intends to close the gap by providing an additional subsidy. Therefore, the proposal of the Ministry of Environment and the request of KE, that during peak hours, the off-peak rate as well as the applicable quarterly adjustments would be charged and the difference in this regard would be recovered by the GoP in as a grant, is approved until June. 30, 2022.

Concerning the request of MoE and K-Electric, for the automatic incorporation of the extension into the industrial package in the tariff structure then in force of Discos and K-Electric, the Authority considered that before giving such approvals, a full rationale for the proposal with input from all stakeholders should be considered, therefore, the request from the Ministry of Environment and K-Electric for the automatic extension of the FAI is not accepted.

Nepra also ordered that the industry package regarding incremental sales be extended to all industrial consumers, including B-1 (Non-ToU) consumers.

Copyright Business Recorder, 2021



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