Nepra, which has made its highest ever quarterly tariff adjustment for 1QFY24, is ready to meet the relatively modest petitions of discos for 1QFY24 adjustments. It helps that the adjustment is driven by significant upward adjustments in base tariffs; This almost always means that there is much less need for any significant adjustments in the first quarter after the annual rebasing exercise. This also helps keep exchange rate movements largely in line with what is included in base tariffs.
Discos collectively demanded adjustment of Rs 23 billion instead of 1QFY24; Most of these relate to overruns in the capacity cost component. For context, a massive adjustment of Rs 135 billion has been made instead of 4QFY23, the effects of which will continue to be felt for six months, as it was decided to accumulate adjustments over a longer period of time to reduce the inflationary impact. The 1QFY24 regulation at the bottom allows the authority to incorporate the regulation into the ongoing plan without the need to significantly change the final consumer tariff. The impact will be below Re1/unit and may be priced at the QTA currently in effect.
The most encouraging aspect of the discos’ QTA petitions is the trend of transmission and distribution losses. Seven in ten discos provided details of T&D losses, with overall losses limited to 11 per cent. It is assumed that actual losses will be much higher because non-reporters, especially QESCO and HESCO, are at the upper end of losses.
However, a significant decline in T&D losses is seen at companies such as PESCO and SEPCO, which have traditionally reported very high losses. Peshawar’s losses within 20 percent are a huge improvement over the 38 percent reported in FY22. The same rate for SECPO, while it had been consistently above 35 percent for a long time, dropped by more than half to 17 percent. MEPCO, the largest contributor to the loss in terms of absolute quantity, also saw T&D losses fall 3 percentage points to 12 percent.
Recall that the ministry is conducting an active anti-theft campaign and the first results are encouraging. Some of the impact will of course come from the campaign – but this only started on September 7, which suggests that discos are doing a really good job of cutting losses. The ministry’s efforts in less than two months have resulted in savings of over Rs 45 billion at the rate of almost one billion rupees per day due to reduction in theft and improvement in bill collection.
It is still early days, but the ministry should be praised for showing results on an issue that has long been a major obstacle to gaining efficiency. It is no secret that poor recovery and high losses have long crippled the financial health of the sector, amounting to Rs 300 billion. Interprovincial coordination is seen as the key to early success. No matter what happens after the 2024 elections, this situation is inconceivably likely to continue. It is clear as day that political patronage has held the entire energy sector hostage for decades. Ongoing efforts need to be continued and improved for the sector to be freed from the shackles.
news source (www.brecorder.com)
