ISLAMABAD:The National Electric Power Regulatory Authority (Nepra) has approved a seven-year, Rs392 billion investment plan for K-Electric (KE) to improve its electricity supply network.
In the plan submitted to the power-sector regulator, KE pointed out that there would be an increase of Rs1.9 per unit in transmission tariff and Rs1.3 per unit in distribution tariff if the investment plan was approved without any reduction. Hence, there will be a cumulative increase of Rs3.2 per unit (at the PKR/USD rate of 206) if the Rs484 billion investment plan is approved. Since, there is a uniform tariff in the country, the subsidy will be impacted.
However, the regulator approved an investment plan of Rs392 billion against the proposed plan of Rs484 billion sought by KE. Therefore, the tariff hike may be lower and final figures will be discussed and finalised during proceedings for the company’s supply tariff. Nepra also approved a reduction of 1.95 percentage point in transmission and distribution (T&D) losses from 14.58% (for financial year 2023-24) to 12.63% (for FY 2029-30).
Furthermore, it decided that in case KE had T&D losses lower than the allowed target for the respective year, the benefit of additional reduction in losses for that particular year will be shared with consumers and KE in the ratio of 75:25, respectively.
Nepra emphasised that the upgrading of Scada – a smart network technology – was necessary to keep pace with the modern technological advancements to yield maximum benefits. It approved an investment of Rs8,161 million for Scada upgrading.
The Outage Management System (OMS) technology is used to manage outages and restore power supply to consumers as quickly and safely as possible and generally reduces outage durations by 20% through efficient crew and outage management, and communication with customers.
The smart network technology including Scada and ADMS on 200 feeders will reduce the duration of outages and improve service quality. Nepra has approved an investment of Rs8,901 million in smart networks.
Meanwhile, in a statement, KE said Nepra had given its decision on the utility’s Transmission and Distribution Investment Plan till FY 2030, which will catalyse the company’s efforts to reduce losses in T&D, drive growth in its customer base, and bolster the power utility’s infrastructure to meet current demand and future needs.
Investment in power utility infrastructure is essential to ensure a smooth, stable, safe, and uninterrupted supply of electricity to a growing number of customers. Since privatisation, investment of Rs544 billion has enabled KE to double its customer base, double the power consumption of this customer base, and more than halve its T&D losses, it said. The plan was submitted in accordance with regulatory guidelines and a hearing was held in March 2023 where the KE management apprised stakeholders of the projects being planned from FY 2024 to FY 2030.
For this period, according to the company, KE has clearly identified priorities and projects for investment areas such as growth, energy loss reduction, network rehabilitation, maintenance, and safety. “Digitisation is also a central area of focus in these operational areas.”
The investment plan outlines projects to install more automated meter readers (AMRs) and embrace technology such as advanced distribution management systems and meter data management systems to strengthen internal processes and introduce more transparency.
On the transmission front, the plan envisages the addition of grids and transmission lines, which will further strengthen the reliability of KE’s network and enable the offtake of additional power from the national grid.
Commenting on the development, KE CEO Moonis Alvi stated, “Over the next seven years, we are looking to invest $2 billion in transmission and distribution to manage the city’s needs through targeted investments and tech-based interventions. I’d like to acknowledge the efforts of all stakeholders who have been part of this journey and who will continue to work with us to modernise our infrastructure and prepare us for the future.”
The investment plan complements the company’s power acquisition programme through which KE has outlined its vision to achieve 30% share of renewable energy in its generation mix by 2030.
In this regard, the company has received regulatory approval for the Request for Proposals (RFPs) pertaining to 640-megawatt renewable energy projects, which is another critical link to enable access to affordable energy for all.
“Our teams at K-Electric are reviewing Nepra’s decision in detail and will remain engaged with the regulator, and as we move forward, a sustainable and cost-reflective tariff remains critical for timely execution of the investment plan,” KE said.
Published in The Express Tribune, April 25th, 2024.
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