K-Electric to pass on over Rs 17 billion to consumers

The accumulated amount under claw back mechanism, which K-Electric has to pass on to its consumers, has gone up to over Rs 17 billion. It emerged on Monday.

Sources in National Electric Power Regulatory Authority (Nepra) and consumer representatives said the loss-bearing power utility at the time of amendment agreement with Ministry of Power Government of Pakistan in 2009 made a commitment to share a certain percentage of profit with its consumers from the year it started making profit.

The promise was made after the government gave various ‘concessions’ to the company including power supply of 650MW from National Transmission and Dispatch Company (NTDC) for five years and provision of huge subsidy to balance the fuel cost variations. They said KE turned into a profitable utility in 2012 and its total accumulated amount of profit had now touched Rs 100 billion figure. However, the power company in a sheer defiance of its commitment did not bother to pass on even a single penny to its 2.2 million inflation-hit consumers.

Mazhar Choudhary, General Secretary KE Shareholders’ Association said, “The matter of claw back mechanism also came under discussion during a recent Nepra’s public hearing in which the authority’s Chairman Brig Tariq Saddozai deplored and said the total amount of claw back has gone up to billions of rupees but the KE, instead of passing the same on to consumers, has taken stay order from the court.

“KE is habitual of taking stay orders,” Mazhar said and elaborated that the regulator had time and again made decisions to protect consumers’ interest on various issues including double bank charges, meter rent, and claw back etc against KE but the power company immediately went to the court and obtained stay orders, depriving 2.2 million inflation consumers of their rights.

“The claw back mechanism is an important clause of KE’s Multi Year Tariff (MYT). The power utility should have shared the benefit to the consumers since it was their lawful right,” Abu Bakr Osman General Secretary Pasban-e-Pakistan told Business Recorder.

On the other hand, a KE spokesman said cClaw back mechanism was part of KE’s MYT and KE had no reservation on its continuation and sharing profit with consumers. However, there was a difference of interpretation in claw back calculation between KE and Nepra which was in the court for final decision in the matter, he concluded.