The National Electric Power Regulatory Authority (NEPRA) will hear on Monday the multi-year tariff petition of the Faisalabad Electricity Supply Company (FESCO) which has been prepared with the assistance of the financial advisors appointed by the Privatization Commission for the privatization of the company.
According to the petition filed by FESCO, the company will make an investment of Rs 56.5 billion in the next five fiscal years to improve its network. It plans to increase the average power tariff from Rs 12.20 per unit in FY2015-16 to Rs 13.17 per unit in FY 2019-20. The company plans to reduce its line losses from the current 10.90 percent to 9.98 percent within next five years. The company plans to increase its distribution margin from Rs 1.93 per kWh to Rs 2.11 per kWh in next five years.
The petition says that it has been prepared with the assistance of financial advisors hired for the privatization of the company. The FESCO also informs that it will have to hire more than 3,000 staff to smoothen the operations before privatization.
It is important to mention that the multi-year tariff is being made on the demand of the international financial institutions to offer the company to the investors. The government has already given its commitment to the International Monetary Fund (IMF) that it will be privatizing FESCO, IESCO and LESCO during the current financial year. Privatization of public sector companies is one of the major conditionality of the IMF under its loan programme.
In response to FESCO’s petition, the NEPRA has framed 29 issues to be answered by the company which soon go under the hammer. The NEPRA has asked whether the petitioner reference return on regulatory asset based on projected rate of return of 18.91 percent for FY 2015-16 is justified for future adjustments till FY 2019-20? Whether the load demand forecast provided by FESCO is justified? Whether the base line conditions identified by the FESCO in its five years investment plans truly reflective of its prevailing performance and conditions? How the FESCO will ensure timely implementation and completion of the committed projects identified under its investment plans? Whether the FESCO has arranged the funds required to undertake these projects? Whether the generation addition by setting up new IPPs, as provided by the FESCO, are consistent with the generation expansion plans of NTDC in next five years? The FESCO is required to submit year wise rationale in respect of cost-benefits through investing the above-mentioned amount and improvement in its existing networks such as improvement in HT/LT ratios and average length per 11 kV feeder. The FESCO needs to provide details by linking it to historical data. The FESCO showed cumulative savings in terms of reduction in power losses as 18.8 MW, energy savings as 91.05 GWh and a cumulative decrease of 1.16 percent in projected losses over next five years.
