The National Electric Power Regulatory Authority (NEPRA) on Monday directed the Faisalabad Electricity Supply Company (FESCO) management to submit the letter of ministry of water and power which directed it to handover Rs 13.5 billion profit to the Central Power Purchasing Agency (CPPA).
The issue was disclosed at the hearing of a multi-year tariff petition of FESCO which is likely to go under the hammer. The FESCO management stated at the hearing that the company has 100 percent recovery ratio and earned a profit of Rs 13.5 billion during the last fiscal year.
NEPRA Chairman Tariq Saddozai asked for what purpose the company had planned to utilise the profit. The FESCO management replied that it was handed over to the CPPA. The chairman against asked under what authority they did so. The management replied that they did it on the directions of ministry of water and power. On this, the chairman directed the management to submit the letter concerned for consideration of the regulator.
The NEPRA chairman said the company was soon to be privatised and handing over the profit to the CPPA would cause controversy as the investors would be interested in knowing the reasons that how it would be returned to the company.
The NEPRA noted that the company’s petition was prepared with the help of the financial advisors appointed for the privatization but it looked more like a petition of some government entity. The company was advised to make an aggressive investment plan for the initial two years after privatization so that the new investors could inject capital for infrastructure improvement and better services to the consumers.
The Privatization Commission authorities were asked to submit a response from the government whether the tariff differential subsidy would be passed on to the company after privatization or it will be blocked. If the government continues with subsidy then it would not help the privatization as national exchequer will continue to bear the financial burden.
The FESCO management asked that the NEPRA should resolve the issue of mutual use of transmission lines by DISCOs as MEPCO was demanding payment for use of its transmission lines. They suggested that either inter-DISCO or NTDC-DISCO agreement should be signed to resolve the issue.
Financial advisors for privatization suggested that there should be a reopening clause in the multi-year tariff so that the investors could approach NEPRA for review after taking over the company. The NEPRA reserved its decision after the hearing.
