KARACHI: K-Electric Limited would collect an additional Rs3.9 billion from consumers on account of fuel cost adjustment (FCA) for the months of June to December 2020.

Recovery of these outstanding amount against electricity supply is subject to approval by the National Electric Power Regulatory Authority (NEPRA).

K-Electric proposed to recover a total of Rs6.118 billion as cost of fuel was higher in the months of July, August, September and October of 2020, and proposed to return/adjust Rs2.21 billion as fuel costs were lower in the months of June, November and December of 2020, translating into net recoverable amount of Rs3.9 billion.

K-Electric also filed its requests for quarterly adjustments in   on account of variation in power purchase price (other than fuel), impact of T&D losses as per mechanism provided in the Multi Year   (MYT).

K-Electric has proposed a reduction of Rs3.92/kWh for April-June 2020, and increase of Rs1.93/kWh for July-September 2020, and Rs1.87 for October-December 2020. The net impact is a deduction of 11.5 paisas/kWh to be adjusted in addition to fuel cost adjustment.

The proposed reduction of Rs3.92/kWh for April-June quarter is despite writing of Rs7.49 billion as bad debts.

As per the mechanism provided in the determination, impact of change in KE’s own generation fuel cost component due to variation in fuel prices, generation mix and volume shall be passed on to the consumers directly in their monthly bills in the form of Fuel Charges Adjustment (FCA).

Similarly, impact of change in the fuel component of Power Purchase Price (PPP) due to variation in fuel prices and energy mix shall also be passed on to the consumers through monthly FCA.

K-Electric mentioned the write-off claims for FY2017 to FY2019 to the tune of Rs13.6 billion are pending for approval before the authority.

K-Electric mentioned the delay in determination of monthly and quarterly   variations was significantly impacting the working capital position of the company, as payments to fuel suppliers and Independent Power Producers (IPPs) were to be made timely and the differential had to be covered through borrowings which had already reached to unsustainable levels.

Borrowings to fund operational and working capital requirements have reached to an alarming level of Rs109 billion, which poses a serious threat to the operational sustainability of the company. Moreover, delays in determination also create complications in recovery of these accumulated variations from consumers as well as government.

K-Electric is a Pakistani investor-owned utility managing all three key stages – generation, transmission and distribution – of producing and delivering energy to consumers. This is a Pakistani electric supply company, based in Karachi, Sindh, Pakistan. www.ke.com.pk