LAHORE:National Electric Power Regulatory Authority (NEPRA) Chairman Tausif H. Farooqui said on Saturday that MDI (Maximum Demand Indicator) Fixed Charges being charged from the industry could not be removed as current account deficit was to be met by charging according to the allocation.
He was talking to business community here at Lahore Chamber of Commerce and Industry (LCCI). The LCCI President Kashif Anwar and Vice President Adnan Khalid Butt also spoke on the occasion while Executive Committee members attended the meeting.
The NEPRA Chairman said that the rate of energy was to be determine on the cost of power generation which was already high because “we depend on the imported fuels and due to the devaluation of currency, people have to bear expensive electricity.”
He also called the working of cold storages as season, adding that the seasonal businesses could disconnect their electricity connections and reconnect when they needed electricity but the cold storages were not a seasonal business, as they work throughout the year and met the needs of vegetables, fruit and other perishable items in the country.
LCCI President Kashif Anwar mentioned that a few months back, NEPRA had imposed Maximum Demand Indicator charges on all industrial and commercial consumers under which they were charged 50 percent of their sanctioned load. He said that electricity bill had to be paid without using the units. If they used electricity more than 50 percent of their allotted load, then they would pay the bill according to the units used instead of MDI charges. He said that this decision was affecting the business community whose industrial units were closed or work in their industry was done on a seasonal basis. “We have also taken up this issue with the CEO of LESCO and he has assured all possible support to the business community in this regard,” he said.
The NEPRA Chairman said that the rate at which Discos were charging MDI, they were paying 10 percent more to Central Power Purchasing Agency Guarantee limited (CPPA-G). This was a very low price that they were charging.
Tausif H. Farooqui said that NEPRA had allowed the seasonal industry to disconnect and reconnect four times in a year without any charges to which the President Lahore Chamber Kashif Anwar said that notification of disconnection and reconnection should be issued so that “we have some legal protection in this regard.”
The NEPRA Chairman said, “We are having a hearing next week on MDI. By joining it businessmen can let us know about their concerns. If businessmen are using more than 50 percent electricity, they are not charged any MDI. If one has high sanctioned load while usage was low then it needs to rethink.”
Tausif H. Farooqui said that the Authority had decided that the rate of net metering would remain at Rs 19.90 and would not be less than that. Even if it was given at Rs 9, there was no loss, but since the decision had been taken, the rate would remain the same.
He said that NEPRA had issued licenses for 65,000 MW power supply while the total requirement was 23,000 MW across the country. “We currently have an installed capacity of 43,000 MW out of which 65 percent of electricity generation is done on imported fuels. We don’t have dollars. The rupee has devalued due to which coal has also become expensive. Due to dollar alone, our cast has increased eight times and overall input cost has increased by 16 percent. How is it possible that despite the 16 percent increase in input cost, we do not increase the tariff,” he added.
He said that NEPRA’s job was to provide affordable, reliable and sustainable energy and it had four functions including Licensing, Tariff, Monitoring and Enforcement and Consumer Affairs Department.
“We have resolved 97 percent of the complaints received by our department,”he said, asserting that earlier NEPRA was passive and now reactive. “When I came, I had two commitments. One take and pay for electricity and second don’t pay for not getting electricity. And further we have decided that we will not start any more projects on import based fuel,” he said.
Tausif H. Farooqui said that any expenditure in the new energy policy would be done on comparative bidding. NEPRA had currently approved the country’s first RFT of 600 MW. Apart from this, they were also doing a road show at the Middle East Energy Conference on March 7.
The NEPRA Chairman said that there was no scientific method to generate electricity in Pakistan. To deal with the same thing, Inductive Generation Capacity Expansion Plan (IGCEP) had been brought in which capacity expansion plan would be given annually for ten years. This would create opportunities to generate electricity in Pakistan at minimum cost, he added.
“We want to reverse our energy production system i.e. 65% of energy we generate from imported fuel and 35% from renewable sources. Electricity generated from hydro is also called renewable. According to this calculation, if we produce 35% green energy, we can apply from GSP to GSP Plus, which will benefit the business community,” he added.
He said that NEPRA had decided that there was no need to come to NEPRA for purchase of more than one MW of electricity in the wholesale market. “I want to deregulate the market as a power regulator. That is why we have broken down the National Transmission and Dispatch Company (NTDC)”, he added.
He said, “CPPA-G is broken into two parts. We have currently installed 780,000 new electronic meters due to which buying and selling has become digitized. Apart from this, Nepra has established Pakistan’s largest training center in LUMS in which 907 people have been trained so far.”
He said that Competitive Trading Bilateral Contract Market (CTBCM) was a great opportunity. Business people could buy electricity through it or generate and sell electricity. “Our program is power and prosperity which aims to operate in communities and work for their prosperity. As a result, license holders of this program, which started two years ago, have so far financed 33 billion rupees, with which 968 new projects have been set up,” he said and added that 52 thousand jobs were created in which 10 thousand were given to women.
According to an estimate, currently 26% of Pakistanis did not have electricity, which was 55.5 million. The concept of micro-grids was very common in the world through which the private sector could provide electricity to the people using any distributor electricity or renewable electricity. The first company in Pakistan had started providing electricity to eleven villages and 5500 people using this model. It was a powerful regulation that also had legal protection, he added.
LCCI President Kashif Anwar said that at this time, this rumor was also circulating that the proposal to reduce the rate of Net Metering was under consideration. “On the one hand, we are worried to reduce our import bill. Our fuel import bill is only 23 billion dollars. In such a situation, we have to shift to Renewable Energy but they are reducing the rates of net metering. If such a decision is taken, there will be a lot of discouragement in promoting the use of renewable energy especially solar energy,” he added.
He requested the NEPRA Chairman to play his role in rolling back the MDI charges and remove the confusion about the Net Metering rate.
He said, “Renewable energy accounts for less than 5% of our total electricity production, that is why we have import fossil fuels for energy production, which is a very expensive source and leading to increased tariffs and consequential cost of doing business.” He said that hydropower and renewable energy generation should be increased.
He said, “Many of our members are from cold storage sector, who have reported that NEPRA has changed their tariff from industrial to commercial, which has led to a huge increase in their electricity bills. Cold storage is an important part of food supply chain and due to increase in cost, the cost of production has further increased.” He demanded that this decision should be withdrawn otherwise the cold storage business would not remain viable. He said that participation of the business community in the Tariff Hearings of NEPRA was very important.