Good news for Karachi: K-Electric seeks Rs10.26 refund to consumers

Some relief for the people hit by unprecedented inflation as K-Electric sought to refund about Rs10.26 per unit charged to its consumers under monthly fuel charges during December 2022 involving a negative financial adjustment of about Rs12.1 billion in the power utility’s accounts.

The much-required respite comes as the IMF is pressing the government hard for increasing the power and gas tariffs as well as imposing a levy and GST (General Sales Tax) on petroleum products – a move that is inflationary in its nature.

It means Fuel Charge Adjustments (FCA) for KE has now dropped to the negative zone for a few months because of a more than Rs7 per unit increase in nationwide uniform base tariff from July 1, 2022 and higher quarterly tariff adjustments since then.

Hence, the FCA for the K-Electric’s consumers is lower than the reference tariff. This partly reduced the burden of record-breaking increase in FCA that went beyond Rs11 per unit during the last fiscal year ending June 30, 2022.

The National Electric Power Regulatory Authority (NEPRA) has accepted the KE’s tariff petition under the monthly fuel cost adjustment (FCA) mechanism and fixed Jan 30 for a public hearing.

It will now examine the petition on two counts — whether the Karachi-based power utility’s refund estimate was justified or required a higher refund to consumers and whether the company had followed economic merit order while utilising its own and external power purchases.

After approval by the NEPRA, the cut in FCA would be adjusted in consumers’ bills in the upcoming billing month of February. The FCA is reviewed every month as per the tariff regime applicable across the country and is usually applied to the consumer’s bills for one month only.

Earlier this month, NPERA had allowed Rs7.43 cut in FCA for power consumed in November against K-Electric’s request for Rs7.21 per unit cut. Under that decision, the Karachi-based power utility is required to refund about Rs10 billion to consumers during the current billing month (January).

The much-required respite comes as the International Monetary Fund is pressing the government hard for increasing the power and gas tariffs as well as imposing a levy and GST (General Sales Tax) on petroleum products – a move that is inflationary in its nature.

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