Islamabad — Residents of Karachi are set to experience a significant increase in their electricity bills over the coming months following a recent decision by the National Electric Power Regulatory Authority (NEPRA). The regulatory body has approved K-Electric’s request for a substantial tariff adjustment, which will see electricity charges rise by Rs2.5934 per unit in October and Rs3.1688 per unit in November.
This adjustment is linked to fuel cost changes for the months of May and June 2024. The total impact of these adjustments amounts to Rs5.763 per unit, which translates into an additional burden of nearly Rs10.6 billion on consumers. Including GST, the total cost could climb to approximately Rs12.5 billion.
The decision followed a public hearing held on July 30, 2024, where Nepra reviewed K-Electric’s petition. Initially, K-Electric had requested an increase of Rs5.45 per unit (Rs2.53 for May and Rs2.92 for June’s fuel cost adjustment). However, Nepra approved a higher adjustment than what was originally sought by the utility.
Key Points and Criticism:
- Fuel Cost Adjustments: The increase in tariffs is due to discrepancies in the fuel cost components used by K-Electric for calculating electricity rates. K-Electric had used a fuel cost of Rs8.9623 per unit for May and Rs9.1190 per unit for June 2024. The approved costs were higher—Rs9.1190 per unit for May and Rs9.7545 per unit for June. This led to positive adjustments of Rs118.76 million for May and Rs459.32 million for June 2024.
- Public and Industrialist Concerns: During the public hearing, there was notable criticism directed at Nepra from Karachi-based industrialists, politicians, and power consumers. Critics argued that Nepra has been acting as a “rubber stamp” for both the government and K-Electric, approving their demands without sufficient consideration of the public’s interests.
- Alternative Proposals and Opposition: Some stakeholders, including the Karachi Association of Trade and Industry (KATI) and the Bangladesh-Qatar Association of Trade and Industry (BQATI), suggested a provisional Fuel Cost Adjustment (FCA) charge of Rs1 per unit for May and June 2024 due to the economic hardships and high inflation currently affecting consumers. They proposed making adjustments in the winter months when electricity consumption is typically lower.
- Policy and Operational Decisions: Jamat-e-Islami’s Imran Shahid opposed the FCA request, arguing that it does not benefit consumers. Arif Bilwani questioned K-Electric’s use of KCCP generation on High-Speed Diesel (HSD) rather than the cheaper BQPS-I on Residual Fuel Oil (RFO). K-Electric defended its choices, citing merit-based dispatch and load demand considerations. Bilwani also suggested using power from the National Transmission and Dispatch Company (NTDC) to cut costs, but Nepra noted that increasing electricity from the National Grid involves broader policy decisions.
The forthcoming rise in electricity tariffs has sparked widespread concern and frustration among Karachi residents, businesses, and policymakers. As the impact of these adjustments unfolds, the discourse around energy pricing and regulatory practices is expected to continue, with a focus on balancing consumer interests and operational costs.
