NEPRA Chairman refuses to lift MDI fixed charges

Lahore: National Electric Power Regulatory Authority (NEPRA) Chairman Tausif H. Farooqui on Saturday refused to remove MDI fixed Charges which were being taken from the business community over meager allocation of load and even if the factory was closed.

The industrialists have to pay the fixed charges to DISCOs.

The NEPRA chairman said that the current circular deficit was to be met by charging according to the allocation. The rate of energy was to be determine on the cost of production which is already very high because we depend on the imported fuels and due to the devaluation of currency, people had to bear expensive electricity.

He was speaking at the Lahore Chamber of Commerce and Industry. LCCI President Kashif Anwar and Vice President Adnan Khalid Butt also spoke on the occasion while Executive Committee Members were present on the occasion.

NEPRA Chairman also called the working of cold storages as seasonal and told that the seasonal businesses can disconnect their electricity connections and reconnect when they need electricity but the cold storages are not a seasonal business, but they work throughout the year and met the need of vegetables, fruits and perishable items of the country.

LCCI President Kashif Anwar drew the attention of Chairman NEPRA towards the issue of MDI charges saying that a few months back, NEPRA has imposed Maximum Demand Indicator charges on all industrial and commercial consumers under which they are charged 50% of their sanctioned load. He said that electricity bill has to be paid without using the units. If they use electricity more than 50% of their allotted load, then they will pay the bill according to the units used instead of MDI charges. He said that this decision is badly affecting the business community whose industrial units are closed or work in their industry is 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.

NEPRA Chairman said that at the rate at which Discos are charging MDI charges, they are paying 10% more to Central Power Purchasing Agency Guarantee limited (CPPA-G). This is a very low price that they are charging.

He said that NEPRA has 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.

NEPRA chairman said that they were 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% electricity, they are not charged any MDI. If one has high sanctioned load while usage is low then it needs to rethink.

He said that we have decided that the rate of net metering will remain at 19.90 rupees and will not be less than that. Even if it is given at 9 rupees, there was no loss, but since the decision has been taken, the rate will remain the same.

He said that NEPRA has issued licenses for 65,000 MW power supply while the total requirement is 23,000 MW across the country. We currently have an installed capacity of 43,000 MW. He said that 65% 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 cast has increased by sixteen percent. How is it possible that despite the 16% increase in input cost, we do not increase the tariff.

He said that NEPRA’s job is to provide affordable, reliable and sustainable energy. NEPRA has four functions including Licensing, Tariff, Monitoring and Enforcement and Consumer Affairs Department.

“We have resolved 97% of the complaints received by our department”, he said adding 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.

He said that any expenditure in the new energy policy will be done on comparative bidding. NEPRA has currently approved the country's first RFT of 600 MW. Apart from this, they are also doing a road show at the Middle East Energy Conference on March 7.

Chairman NEPRA said that there is no scientific method to generate electricity in Pakistan. To deal with the same thing, Inductive Generation Capacity Expansion Plan (IGCEP) has been brought in which capacity expansion plan will be given annually for ten years. This will create opportunities to generate electricity in Pakistan at minimum cost.

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 said that NEPRA has decided that there is 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 that 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) is a great opportunity. Business people can 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. 52 thousand jobs were created in which 10 thousand were given to women.

According to an estimate, currently 26% of Pakistanis do not have electricity, which is 55.5 million. The concept of micro-grids is very common in the world through which the private sector can provide electricity to the people using any distributor electricity or renewable electricity. The first company in Pakistan has started providing electricity to eleven villages and 5500 people using this model. It is a powerful regulation that also has legal protection.

The LCCI President Kashif Anwar said that at this time, this rumor is also circulating that the proposal to reduce the rate of Net Metering is 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. He said that if such a decision is taken, there will be a lot of discouragement from the government in promoting the use of renewable energy especially solar energy. He requested NEPRA Chairman to play his role in rolling back the MDI charges immediately and remove the confusion about the Net Metering rate.

The LCCI President said that the 9th review negotiations with the IMF have entered the final stage and we have come to know that there is considerable merit in this to end the subsidy for the industry. In such difficult circumstances, we are already facing severe devaluation and due to high energy cost in the form of increasing tariff of fuel, electricity and gas along with the policy rate of around 17%, our cost of doing business has increased a lot. If the subsidy is also removed, the cost of doing business will increase further.

He said that the 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.

Kashif Anwar said that we have Wheeling/Open Access Regulation but we don't see their Implementation. There is an urgent need to create such a strong mechanism through which businesses at the private level can buy and sell electricity among themselves.

He said that 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 immediately otherwise the cold storage business will not remain viable. He said that participation of the business community in the Tariff Hearings of NEPRA is very important.