The federal government has sought the nod of the National Electric Power Regulatory Authority (Nepra) to impose a surcharge of Rs1.52 per unit on the consumers of K-Electric, Karachi’s sole electricity supplier.

The government wants to recover Rs24.5 billion from the consumers of K-Electric to be recovered in 12 months by imposing this surcharge.

The power regulator might approve incorporating the requested surcharge in the Schedule of Tariff (SoT) determined for the quarter April to June 2022 or including it in the latest one it was deciding.

Nepra might also be issue it as a separate SoT.

The federal government filed a motion with respect to recommendation of consumer-end tariff for K-Electric under Section 31 of the Nepra Act, 1997 — read with rule 17 of Nepra Tariff (Standards and Procedure) Rules, 1998 — for the application of the surcharge.

The government requested the power regulator to hold a public hearing for the purpose of providing detailed submissions.

To arrive at a just and informed decision and keeping in view the request of the federal government, Nepra has decided to hold a hearing on the matter on August 15.

The authority has informed all stakeholders, interested or affected persons, and the general public that it would hold a public hearing on the 15th of the current month.

The participants and stakeholders would  provide their views and comments on the imposition of the surcharge.

Earlier, the Economic Coordination Committee (ECC) of the cabinet had approved a surcharge of Rs1.52 per unit to be recovered from K-Electric consumers in 12 months.

The government claims that it is bearing a cost of Rs250.7 billion on account of subsidy for the consumers of Karachi on account of quarterly tariff adjustments.

Nepra had been determining these adjustments.

Prior to that, the power regulator had conducted a heated debate on imposing the surcharge on K-Electric consumers.

It had raised the question why federal government had approached the power regulator to go ahead for the imposition of the surcharge when it was empowered to do so itself.

During the hearing, the stakeholders from the Karachi will give a tough time as they have been already critical of the federal government’s decision to jack up the electricity tariff.

They are of the view that Karachi has been contributing 42% of the country’s revenue collection but they are being overburdened with high electricity rates.

They have also raised questions over the high prices of electricity being produced by K-Electric from its own resources.

Multiple renewable energy projects planned by K-Electric are currently on hold as their requests for proposals (RFPs) are awaiting approval by Nepra.

The delay was confirmed by the Nepra chairman during K-Electric’s fuel cost adjustment (FCA) hearing for June.

The issue was brought to attention when Rehan Javed, an industrial consumer from Karachi, expressed his concerns about the RFPs lodged with the power regulator that had been pending for approval.

“The approval [of these RFPs] will fast track the inclusion of cheap and affordable power through renewable energy projects and lower electricity prices for businesses as well as other commercial entities in Karachi,” Javed pointed out.

Nepra Sindh Member Rafique Ahmed Shaikh had also drawn attention to this situation in his dissenting note from a previous FCA hearing.

He noted that while K-Electric was continuously directed to increase its renewable energy share, the power utility had been unable to make satisfactory progress.

The primary hurdle, he indicated, was the RFPs awaiting approval by the regulatory authority.

With electricity prices in Pakistan projected to reach record highs because of the energy ministry’s recent petition to raise the base tariff for the new fiscal year, the integration of renewables into the country’s energy mix was now more urgent than ever.

It is seen as a critical step towards achieving price stability and reducing Pakistan’s dependence on imported fossil fuels.