KARACHI: K-Electric has requested NEPRA to pass a reduction of PKR 10.26 per unit in customer bills under Fuel Charges Adjustment (FCA) for the month of December 2022.
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K-Electric fails to improve power generation: NEPRA Chief
KARACHI: Touseef Hassan Farooqi, Chairman, National Electric Power Regulatory Authority (NEPRA) has said that K-Electric failed to improve power generation.
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KE applies for providing relief to consumers in November electricity bills
KARACHI: K-Electric, the utility company, has filed a petition to provide relief to its consumers in the electricity bill for the month of November 2022.
A statement on Monday said that the company for the month of November 2022, it filed a petition for a reduction in Fuel Charges Adjustment (FCA) at the rate of PKR 7.04 /kwh (per unit).
NEPRA will conduct a public hearing today over the petition submitted by K-Electric on account of Fuel Charges Adjustments (FCA) for November 2022.
November’s FCA was lower primarily due to a reduction in prices of RLNG, Furnace Oil, and power purchased from CPPA-G by 18 per cent, 15 per cent, and 37 per cent respectively as compared to September 2022.
FCAs are dependent on changes in global prices of fuel and are passed on to consumer bills under the prescribed rules and regulations of NEPRA and the Government of Pakistan.
FCAs are approved by NEPRA after review who also specifies the month during which the charge is applied in consumer bills.
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K-Electric sees positive outlook despite challenges
KARACHI: K-Electric, a power utility providing electricity to residential, commercial and industrial consumers of Karachi, is confident of positive outlook despite macroeconomic and geopolitical challenges.
“Despite macroeconomic and geopolitical challenges, KE is confident in serving its customers in a reliable and efficient way through a comprehensive, multi-pronged strategy,” said KE’s Chief Financial Officer Muhammad Aamir Ghaziani at a Corporate Briefing Session held at the Pakistan Stock Exchange (PSX) on November 22, 2022.
READ MORE: K-Electric posts huge losses despite 144% jump in tariff adjustment revenue
Sustained investments in the value chain have driven continued improvement in KE’s core business. Since privatization, KE has been able to reduce its transmission and distribution losses from approximately 34% to 15% at the end of FY22.
The utility’s transmission and distribution (T&D) losses have reduced by 2 percentage points at the end of the first quarter of FY23 compared to the same period last year, while generation efficiency has also improved by 0.6 percentage points during this time. Investment of around PKR 62.8 billion in FY22 and PKR 11.6 billion in first quarter of FY23 has been made across power value chain.
READ MORE: Faysal Bank, K-Electric collaborate to ease customer’s payment
KE is also preparing itself for the future. The panel shared plans to add up to 500 MW of efficient, clean energy in the short term to diversify the company’s fuel mix and lower the costs of electricity for the company and consumers alike. Simultaneously, construction works of Dhabeji and KKI grids are underway to allow KE to receive additional supply of up to 2050 MW from the National Grid.
On the distribution front, the company intends to enhance its infrastructure and continue its efforts to reduce distribution losses by rolling out Aerial Bundled Cables (ABCs) on its network and implement new and reengineered processes for an improved customer experience.
Speaking at the event, Sadia Dada, Chief Marketing and Communication Officer, also proudly shared KE’s multi-award winning corporate social responsibility strategy, which is driving grassroots development of the communities it operates in.
READ MORE: KE adjusts electricity bills under FCA relief package
The company shared highlights of its efforts including the installation of water filtration plants, renovation of schools and public parks, and setting up of health camps which have collectively benefitted approximately 200,000 persons.
KE’s flagship Roshni Baji Program also completed its 2nd cohort. Collectively 100 women have undergone training as KE’s neighborhood safety ambassadors as well as the country’s first certified female electricians. Collectively, these women have educated over 463,000 households on safe practices for electricity usage, building safer communities.
READ MORE: NEPRA acknowledges KE’s operational performance
Through different other partnerships, women are also being trained in financial literacy, self-defense, motorcycle operations, and CPR training. Continued awareness on safety through public service messaging has reached hundreds of thousands of people across Karachi’s high-risk areas as well.
The briefing also shed light on external factors which affected KE’s financial performance including, demand disruption due to macro-economic factors, receivables from the Government of Pakistan and related entities, devaluation of the Pak rupee resulting in exchange loss, increases in effective rates of borrowing leading to higher finance cost and increases in consumer tariffs which affected customer’s propensity to pay bills resulting in increase in the provision against doubtful debts.
The Company expects some in increase in growth due to shift of captive consumers to grid during the upcoming winter season and is also working diligently on conversion of captive consumers to grid in line with GoP’s policy as well as simplified New Connection process.
Aligned with the mission of brightening lives by building the capacity to deliver uninterrupted, safe and affordable power to Karachiites, KE will continue to make investments across the value chain, enabling the company to improve operationally whilst progressing on the value creation curve through innovation and technological advancements. However, support from government and regulatory authorities remain critical for the execution of the planned investment
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K-Electric posts huge losses despite 144% jump in tariff adjustment revenue
KARACHI: K-Electric Limited, the electricity generation and supplier company, has declared huge after tax loss of Rs16.35 billion for the quarter ended September 30, 2022 massive jump of 144 per cent in revenue received through tariff adjustment.
According to consolidated financial results for the quarter ended September 30, 2022, the company announced after tax loss of Rs16.35 billion as compared with the after tax profit of Rs2.88 billion in the same period of the last year.
The company announced earnings per share at 59 paisas for the three months period ended September 30, 2022 as compared with EPS of 10 paisas in the same period of the last year.
Board of directors of KE met on October 28, 2022 to approve the financial results.
The company declared huge losses despite the massive jump in revenue from tariff adjustment. KE received Rs65.97 billion as tariff adjustment for the quarter ended September 30, 2022 as compared with Rs27.22 billion in the corresponding period of the last year, showing an increase of 144 per cent.
Total revenue of the company recorded at Rs154.58 billion for the quarter under review as compared with Rs114.17 billion in the same quarter of the last year.
Cost of sales increased to Rs146.53 billion for three months period ended September 30, 2022 as compared with Rs97.53 billion in the same period of the last year.
Company official said that the difficult socio-political challenge both locally and at international fronts, have had a consequential impact on the macro-economic factors.
The economic impact has reverberated through multiple channels, including commodity and financial markets, surging inflation, increasing policy rates and reduction in economic activity. Impacted by these challenges, the Company has observed a reduction in units sent-out by 8.9 per cent and the gross profitability of the Company declined significantly.
The company operates under regulated tariff and as per current Multi-Year Tariff effective from July 01, 2016, no adjustment is provided to the Company in tariff for changes in sent-out and policy rates. Further, the Company observed increase in exchange loss by PKR 2.6 billion owing to devaluation of Pak Rupee and increase in impairment loss by PKR 4.0 billion against doubtful debts due to high inflation, increase in consumer tariff, high FCA and current economic conditions impacting consumers propensity to pay.
The aforementioned factors along with increase in finance cost by PKR 3.4 billion mainly on account of increase in effective rate of borrowing and higher levels of borrowing due to non-payment of dues by Government entities, translated into the loss after tax amounting to PKR 16.3 billion.
The Company is geared up to face the challenges and focusing extensively on further operational improvements as detailed in the relevant business section and also working diligently for renewal of tariff for the next control period starting from July 01, 2023, with an aim to obtain a sustainable cost reflective tariff with robust adjustments mechanism at par with other power sector entities to ensure continuity of reliable and smooth service to consumers at least possible costs.
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Faysal Bank, K-Electric collaborate to ease customer’s payment
KARACHI: Faysal Bank Limited (FBL), one of the leading Islamic Banks in the country, and K-Electric have come together to ease customer’s payment burden in times of economic crunch.
As part of the collaboration, Faysal Islami Noor Card holders will now be able to pay their electricity bills through easy instalment plan options of up to 3 months. Faysal Islami Noor card has gained immense popularity amongst industry card customers because it is a Shariah compliant alternative to conventional credit cards that offers amazing discounts and offers.
Speaking on the occasion, Head Consumer Finance (FBL), Aneeq Malik said: “Customer convenience has always been of paramount importance to the Bank and our partnership with K-Electric is a depiction of our commitment to our customers. We are confident that through the proposition will allow customers to manage their monthly expenditures in a more convenient and relaxed manner.”
Delighted at the launch of this campaign, Chief Distribution Officer at K-Electric, Amer Zia said, “Our collaboration with Faysal Bank through this offer is another testament of our commitment towards providing maximum relief to our consumers”.
Feroz Khan, Head Unsecured Business (FBL) further added, “We are committed to further building customer loyalty by offering the best in class products and benefits to our valued customers. This collaboration aims to ease customer expenditure on their KE billings specifically in the high billing periods.”
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NEPRA acknowledges KE’s operational performance
KARACHI: A report published by National Electric Power Regulatory Authority (NEPRA) has acknowledged the improved operational performance of the KE, the utility company responsible for power generation and supply to Karachi.
The report, published annually by National Electric Power Regulatory Authority (NEPRA), also highlighted the longstanding issue of supply of low gas to K-Electric’s power plants at Korangi and SITE, which is affecting 200 MW of generation capacity for Karachi and leading to expensive power generation.
Through sustained investments, KE has been able to drive a significant reduction in Transmission and Distribution (T&D) losses, closing the financial year at 15.35%, lower than the regulator’s target of 15.95%. The utility has also been able to add over 250,000 new connections to its network bringing the total consumer base to over 3.4 million at the close of the fiscal year. Additionally, the number of units of energy served to these customers has also increased.
Commenting on the results, Director of Communications & Spokesperson KE, Imran Rana stated, “We continue to explore ways to improve our services for our growing customer base, and we are very pleased that KE’s operational improvement is being acknowledged in Power Sector’s credible annual performance report from the Regulatory Authority, NEPRA.
We look forward to carrying this momentum year on year, through increased digitization and automation of our processes and sustained investment across the value chain. We are also keeping our stakeholders – including the NEPRA Authority and the Ministry of Energy, Government of Pakistan among others – fully informed of the factors that continue to affect KE’s sustainability. Long delays in release of the Tariff Differential Subsidy (TDS) claims, and absence of supply of natural gas to KE are two important issues on top of the list that directly affects our ability to serve our customers.”
KE has also been actively developing a culture of regular bill payment and expanded its facilities to offer consumers convenient channels to clear their dues. Over the year, KE’s website has been integrated with NIFT ePay gateway offering real-time bill payment through interbank fund transfers.
Consumers can use the KE Live App to pay their bills from the convenience of their phones regardless of geographic location. Multiple banks and financial institutions have also been brought on board as partners offering cashback incentives and the option of converting utility bill payments on installments for certain credit cardholders.
Furthermore, KE is also engaging with area representatives at a community level for support in promoting a culture of bill payment and has also established multiple facilitation camps across the city to address and support billing queries. These efforts have resulted in improved recovery ratios which closed at 96.69%. During the same period, recovery ratios for DISCOs across the country dropped by 7 percentage points to 90.51%.
The company has also maintained a strong focus on safety, creating awareness on pertinent infrastructure issues including encroachment of constructed properties, the use of kundas, and unauthorized civil works carried across the city which create an unsafe environment for citizens. In addition to securing its infrastructure through earthing and grounding protocols, the utility continues to liaise with relevant civic agencies to ensure a safe and uninterrupted supply of electricity to the city. This has enabled KE to achieve a 28% reduction in safety related incidents within its territory. By comparison, safety incidents increased by 14% within state-owned DISCOs.
The report also commented on macroeconomic and other factors such as the devaluation of the Rupee against the US Dollar, delays in completion on power projects and outages of new power projects which exacerbated the cost of fuel procurement and raised the cost of electricity for the end-user. The report recommends a lot of measures for the improvement of power sector for Government to consider.
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KE adjusts electricity bills under FCA relief package
KARACHI: K-Electric, the power distribution utility for Karachi, has started providing relief under package to waive Fuel Charge Adjustment (FCA), which was announced by Prime Minister Shehbaz Sharif.
According to a statement issued by the power utility on Tuesday, following PM’s Announcement of FCA’s relief package for the month of June, 1.8 million eligible electricity consumers across KE serviced territory in Karachi and adjoining regions are receiving benefit and being delivered adjusted bills for August at their doorsteps with extended due dates.
READ MORE: Date extension demanded for electricity bills payment
The announcement of June’s FCA relief has come in two parts, it was first announced for Non-ToU Residential Consumers having electricity consumption up to 200 units in June, and later it was extended to the same category of consumers with power consumption up to 300 units in June following the announcement by the Government of Pakistan.
While the revised bills for August are being delivered to the consumers on their premises, it is also important to note that all those eligible consumers who have already paid their non-revised August bills will receive adjusted bills for the month of September.
READ MORE: Power tariff hike termed disaster for industries
Commenting on the matter, Spokesperson K-Electric said, “We are taking every possible measure to pass on the benefit to the qualifying consumers in line with the announcement made by the Honorable Prime Minister.
Following the announcement of the relief package, our customer care centers operated for extended hours and remained open during the weekends for consumers’ convenience.
However, to further ease the procedure for their benefit, we are also delivering the bills to consumers’ doorsteps so that they do not have to visit our centers physically. KE Customers may also download their bills via KE WhatsApp Service, KE Live App and from the company’s website.”
While reiterating the eligibility criteria of the relief package, the Spokesperson further said, “June FCA’s relief applies only to Non-ToU residential consumers who have a power consumption equal to or less than 300 units.
READ MORE: Pakistan petroleum sales slump by 24% in 2MFY23
All the remaining electricity consumers, such as ToU residential consumers, Non-ToU residential consumers having power consumption exceeding 300 units, commercial, and industrial consumers do not qualify for the relief, and thus, are requested to timely pay their bills to avoid late payment surcharge.”
“Our customer care platforms, including our call center 118, 8119 SMS service, and social media channels are also available 24/7 to answer any query from our consumers in this regard,” the Spokesperson further added.
K-Electric (KE) is a public listed company incorporated in Pakistan in 1913 as KESC. Privatized in 2005 KE is the only vertically integrated utility in Pakistan supplying electricity within a 6500 km square territory including Karachi and its adjoining areas.
READ MORE: New petroleum prices in Pakistan from September 01, 2022
The majority shares (66.4 per cent) of the company are listed in the PSX owned by KES Power, a consortium of investors including Aljomaih Power Limited of Saudi Arabia, National Industries Group (Holding), Kuwait, and the Infrastructure and Growth Capital Fund (IGCF). The Government of Pakistan is also a minority shareholder (24.36 per cent) in the company.
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Withdrawal of sales tax through electricity bills demanded
KARACHI: Authorities have been urged to withdraw the collection of sales tax through monthly electricity bills for service providers.
Ms. Fauzia Rasheed, advocate high court at M/s. Lawyers Inc., a law consultancy firm, has strongly protested over the collection of sales tax by the federal government through monthly electricity bills from service providers.
READ MORE: Tax through electricity connections on retailers, service providers
In a letter to K-Electric, the power supply utility in Karachi, and forwarded to the chairman of Federal Board of Revenue (FBR), Federal Ombudsman, and chambers of commerce, Fauzia pointed out that her company had received monthly electricity bill, which included: further tax at 3 per cent; extra tax/retail tax at 5 per cent; and newly introduced sales tax on retailers at Rs6,000 being an inactive taxpayer.
She claimed that the sales tax collection had been made in the bill for the month of July 2022 as her company was a legal service provider.
Furthermore, as per the record of the Federal Board of Revenue (FBR) the law firm is an active taxpayer as per requirement under Income Tax Ordinance, 2001.
READ MORE: FBR explains income tax on export of services
In her letter, she explained that Section 3(1A) of the Sales Tax Act, 1990 relates to further tax (leviable where taxable supplies are made to a person who has not obtained registration number), Section 3(5) of the Act relates to Extra Tax (The government may imposed extra tax in addition to tax levied under sub section (1), (2) & (4) of Section 3) and Section 3(9) relates to sales tax on retailers, before and after the amendments made through Finance Act, 2022, under the Sales Tax Act, 1990 are applicable on the persons who is/are dealing in retail business of the taxable goods/supplies and required to be registered under the Act, 1990 but did not registered himself /themselves in FBR for the said purpose.
“Indeed, we [the law firm] are not dealing in supply /retail of taxable goods and as such you have wrongly levied and charged further tax u/s 3(1A), extra tax u/s 3(5) or 3(9) and retail tax u/s 3(9) of the Sales Tax Act, 1990 through the Electric Bills,” according to the letter.
READ MORE: FBR restores 100% depreciation deduction
The law firm is only engaged in rendering of legal services on the subject premises, it added.
Under the Sales Tax Act, 1990, neither the company is required to be registered with FBR nor various sales tax through electric bills i.e., Further Tax, Extra Tax and Retail Sales Tax are applicable on it, being a “Service Provider”.
Fauzia said that the K-Electric imposed the sales tax on the monthly bill on the basis of assumption that the commercial connection holder was a retailer.
“You [the K-Electric] have imposed two taxes under the single provision of law i.e., Section i.e., 3(9) of the Act, 1990 relying on prior and post amendment made in Section 3(9) of the Sales Tax Act 1990 through Finance Act, 2022 which cannot be permitted under the law to charge the taxpayer twice, even if it is applicable,” she pointed out towards important provisions of the law.
The relevant amendment made through Finance Act, 2022 in Section 3(9) of the Act, 1990 is reproduced here as under:-
READ MORE: FBR notifies graduated tax rates on disposal of securities
Section 3(9),–
(i) for the words “five per cent where the monthly bill amount does not exceed rupees twenty thousand and at the rate of seven and half percent where the monthly bill amount exceeds the aforesaid amount”, the words “rupees three thousand per month where the monthly bill amount does not exceed rupees thirty thousand, rupees five thousand per month where the monthly bill amount exceeds rupees thirty thousand but does not exceed rupees fifty thousand and rupees ten thousand per month where the monthly bill amount exceeds rupees fifty thousand” shall be substituted;
(ii) after sub-section (9), the following provisos shall be inserted, namely:–
Provided that the above rates of tax shall be increased by one hundred percent if the name of the person is not appearing in the Active Taxpayers List issued by the Board under section 181A of the Income Tax Ordinance, 2001 on the date of issuance of monthly electricity bill:
Provided further that the Board may through a general order prescribe any persons or class of person who shall pay upto rupees two hundred thousand per month through their monthly electricity bill.
Despite having number of employees who are engaged in monitoring of meter or recording of energy consumption from meter installed on the subject premises, the utility provider has blatantly charged such taxes without verification of status whether the consumers is/are liable to be charged for such taxes or not.
It came to our knowledge from number of electricity consumers that the K Electric Limited has charged such taxes from all Commercial Consumers irrespective of their business status and FBR’s active taxpayer’s profile and treated all of them as “In-active Retailer of taxable goods” which cannot be justified or allowed under the Act, 1990.
Such an act of M/s K Electric Limited comes within the meaning of mal-administration as defined under Section 3 of the Federal Tax Ombudsman Ordinance, 2000.
Keeping in view of above legal position, the imposition of impugned taxes through Electric Bills is illegal, unlawful, harsh and unwarranted under the law.
The advocate advised the utility provider to remove the taxes mentioned immediately from the subject electricity bills and issue fresh corrected bills. “Otherwise, we have left with no option but to approach the Federal Ombudsman for redress of the grievances,” she warned.
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NEPRA to conduct public hearing on KE’s petition on July 28
KARACHI: National Electric Power Regulatory Authority (NEPRA) has announced to conduct a public hearing on July 28 over the petition submitted by K-Electric on Fuel Charges Adjustments (FCA) for June 2022.
The utility has sought an increase of Rs11.38/KWh in its FCA petition for June 2022. As per applicable tariff across the country, fuel adjustment is reviewed every month and is applicable on consumer bills for only one particular month.
READ MORE: Revised power tariff, taxes on electricity bills in Pakistan
The major impact on the monthly Fuel cost adjustment of June 2022 is due to an increase in the fuel price increase of Furnace Oil and power purchased from CPPA-G.
The price of RLNG in June 2022 has increased by 50 per cent from March 2022. The price of RLNG as at June 2022 is Rs4,627 / MMBTU as compared to the price of Rs3,083 / MMBTU in March 2022.
The price of electricity from CPPA-G in June 2022 has increased by 74 per cent from March 2022. The price of power purchased from CPPA-G as at June 2022 is Rs15.844/KWh as compared to the price of Rs9.098/ KWh in March 2022.
READ MORE: K-Electric, Siemens sign deal for KKI Grid construction
Fuel Charge Adjustment (FCA) is incurred by utilities due to global variation in fuel prices used to generate electricity and change in the generation mix. These costs are passed through to the consumers following NEPRA’s scrutiny and approval and are one-time charges. Consumers also receive a benefit when the cost of fuel decreases.
After the public hearing and scrutiny, the regulator will make a decision on the request and issue instructions on the period during which these costs can be applied to consumer bills.
READ MORE: Rupee devaluation severely affects KE’s profitability
K-Electric (KE) is a public listed company incorporated in Pakistan in 1913 as KESC. Privatized in 2005 KE is the only vertically integrated utility in Pakistan supplying electricity within a 6500 square Kilometre territory including Karachi and its adjoining areas.
The majority shares (66.4 per cent) of the company are listed in the PSX owned by KES Power, a consortium of investors including Aljomaih Power Limited of Saudi Arabia, National Industries Group (Holding), Kuwait, and the Infrastructure and Growth Capital Fund (IGCF). The Government of Pakistan is also a minority shareholder (24.36 per cent) in the company.