Power Regulator Rejects Industry's Demand to Remove Fixed Electricity Charges

Bullets:

  • Nepra refuses industry demand to end fixed charges for Maximum Demand Indicator (MDI) system.
  • Power generation licenses for 65,000 MW were issued, and the installed capacity remains at 43,000 MW.
  • Nepra chief argues MDI charges are necessary to meet the current account deficit.
  • Business owners can disconnect and reconnect electricity connections four times a year without charges.
  • Currency depreciation has increased power generation cost by 8 times and overall input cost by 16%, making tariff hikes necessary.

Power Regulator Rejects Industry Demand to End Fixed Charges for Maximum Demand Indicator

Nepra, the power regulator, has declined the industry's request to discontinue fixed charges for the maximum demand indicator (MDI) system, which measures the highest amount of electrical energy needed by a particular consumer within a given timeframe. During a talk at the Lahore Chamber of Commerce and Industry (LCCI), Nepra Chairman Tauseef H. Farooqi disclosed that licenses for power generation of up to 65,000 megawatts had been granted, but the current installed capacity was only 43,000 megawatts. It is worth noting that the current installed capacity is insufficient to fulfill the industry's power requirements.

Fixed Charges on MDI to Remain:

Farooqi explained that lifting the MDI fixed charges, which are being charged from the business community, is not possible due to the current account deficit that is to be met by charging according to the allocation. He added that the rate of energy is determined by the cost of production, which is already high because Pakistan relies on imported fuel. As a result, people have to bear expensive electricity costs due to the devaluation of the Pakistani rupee.

Impact on Business Community:

The decision to retain fixed charges on MDI is likely to affect the business community, which has been demanding their removal. The LCCI has been advocating for a reduction in the cost of doing business, including electricity tariffs, to improve Pakistan's competitiveness in the global market. With fixed charges on MDI remaining, businesses will continue to incur higher electricity costs, putting pressure on their bottom line.

The National Electric Power Regulatory Authority (Nepra) has rejected the business community's demand to end fixed charges for the maximum demand indicator (MDI) system. The MDI measures the maximum amount of electrical energy needed by a specific consumer during a given period. Nepra Chairman Tauseef H. Farooqi stated that the fixed charges could not be lifted due to the country's current account deficit, which is to be met by charging according to the allocation. Business owners claim that they have to pay fixed charges even if their factory remains closed and don't consume power.

Nepra Allows Seasonal Industry to Disconnect and Reconnect Four Times a Year:

In response to this argument, Mr. Farooqi explained that seasonal businesses, such as cold storage, could disconnect their electricity connections and reconnect when required. Nepra had allowed the seasonal industry to disconnect and reconnect four times a year without any charges. However, LCCI President Kashif Anwar suggested issuing a notification for disconnection and reconnection to provide business owners with legal protection.

MDI Hearing Next Week:

Mr. Farooqi stated that Nepra would hold a hearing on the MDI issue next week, and business persons could inform the power regulator about their concerns. He further explained that if businessmen used more than 50% electricity, they would not be charged any MDI. If a consumer had a high sanctioned load, but the usage was low, they would need to rethink.

Licenses for Power Generation Issued for 65 GW, Installed Capacity at 43 GW:

The authority had issued licenses for 65,000 megawatts of power supply, while the country's requirement was only 23 GW. However, the country's installed capacity at present is 43 GW. Mr. Farooqi highlighted that 65% of electricity was being generated using imported fuel, which has become expensive due to currency depreciation. The rupee devaluation has increased the power generation cost by eight times and the overall input cost by 16%, making it impossible to avoid tariff hikes.

Net Metering Rate to Remain at Rs19.90:

The rate of net metering will remain at Rs19.90, as decided by Nepra, and will not be lowered. Mr. Farooqi clarified that even if it were given at Rs9, there would be no loss, but since the decision had been taken, the rate would remain the same.

In conclusion:

In conclusion, the National Electric Power Regulatory Authority (Nepra) has refused to end fixed charges for the maximum demand indicator (MDI) system, which measures the maximum amount of electrical energy required by a specific consumer during a given period. Nepra Chairman Tauseef H. Farooqi revealed that power generation licenses for 65,000 megawatts had been issued, but the installed capacity remained at 43,000 megawatts. The business community had demanded the abolition of MDI charges due to the meager allocation of load. However, the Nepra chief argued that the rate of energy is to be determined by the cost of production, which is already very high because of imported fuel, and insisted that people had to bear expensive electricity due to the rupee's devaluation. Mr. Farooqi said that the rate of net metering would remain at Rs19.90, and not below it. The currency depreciation has increased power generation costs eight times and the overall input cost by 16%, which has made it impossible not to increase the tariff.