- KE seeks to achieve 30% share of renewable energy by 2030.
- Funds to be used for improving transmission, distribution efficiency.
- Rs238.22bn to be spent on upgradation of transmission system.
ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) has approved K-Electric’s (KE) Rs392.49 billion investment plan for grid upgradation, The News reported on Thursday.
The investment funds, approved after thorough scrutiny and evaluation, will be utilised in the next seven years starting from the fiscal year 2023-24 to 2029-30.
The approval comes after Nepra, in January earlier this year, renewed the power distribution and supply licences of KE for 20 years after its previous licence expired in July 2023.
Nepra’s approval of the investment funds comes after KE, which initially sought Rs484 billion, submitted its investment plan along with a loss assessment to the regulatory body on January 30, 2023, in accordance with the regulatory body’s guidelines and the NEPRA Act of 1997.
It is to be noted that the approval provisions certain terms and conditions allowing it the sole discretion to interpret the investment plan with petitioners and stakeholders directed to approach the authority directly in case of need of any clarification.
Also, the electricity supplier is obligated to procure cost-effective materials and services for project execution and must modify its transmission license for 500 kV assets and ensure zero fatal accidents and a safe working environment using approved investments.
Furthermore, quarterly third-party audits of KE’s investment plans have been mandatory along with quarterly progress reports on investment utilisation and physical progress, with the latter required to be submitted to Nepra’s online portal.
Additionally, petitioners, who also bear the risk of expenses incurred without clear provision are required to distinctly document investment and maintenance projects, verified by third-party audits.
Last year in March, the electricity supplier had claimed an increase of Rs1.9 per unit in transmission tariff and Rs1.3 per unit in distribution tariff if the sought-out investment funds of Rs484 billion were approved.
This meant that there would’ve been a cumulative increase of Rs3.2 (@206 USD/PKR) per unit.
Acknowledging the complexity of the situation, Nepra had then deferred the decision on subsidies to the supply tariff proceedings and focused only on the investment plan’s approval.
The publication further said that this may have an impact of over Rs2.5 per unit increase for the KE consumers.
Here’s an in-depth look at the KE’s seven-year investment plan.
Investment plan
As per the investment plan, the KE is required to allocate Rs238.22 billion towards upgrading its transmission system and Rs136.76 billion towards enhancing its power distribution infrastructure.
Meanwhile, Rs17.31 billion are to be used for support projects, including IT infrastructure and Enterprise Resource Planning (ERP) infrastructure with Rs12.85 billion, Defence, Security, Risk Assessment & Compliance Rs2.655 billion, and on property regularisation and office renovations Rs1.8 billion and will spread across the seven years.
Transmission enhancement
The enhancement in the transmission network amounts to a notable chunk of the investment plans it provisions Rs79,694 billion for grid station development along with Rs41.112 billion for transmission line expansion.
Also, investment expenditure amounting to Rs17.617 billion used for enhancing the infrastructure of the 500 kV KKI Grid Station between 2017 to 2023, has been incorporated into the recently approved plan’s first year (FY24).
The new investment plan also provisions for Rs14.253 billion for the maintenance and protection of the grid station along with Rs4.754 billion were directed towards the maintenance and protection of transmission lines to ensure their longevity and functionality.
Meanwhile, Rs2.684 billion will be used for transmission safety measures, emphasising the importance of security and stability in transmission infrastructure.
Funds amounting to Rs8.149 billion will be used to reduce congestion and improve network reliability, particularly for new transmission lines meeting N-I contingency provisions, whereas Rs18.508 billion have been allocated to rehabilitating and augmenting existing lines for N-I provision. Also, Rs11.847 billion have been set aside for replacements and other works.
These investments include installing a third transformer at the 500 kV NKI Grid Station and a 220 kV D/C LILO line from NKI to Baldia/Surjani, each receiving Rs5.084 billion and Rs1.320 billion respectively.
In addition to this, Rs2.556 billion have been allocated for transmission loss reduction. Meanwhile, interconnection projects with the National Grid (NTDC) and solar plants, like the 500 kV KKI Interconnection and 220 kV Dhabeji Interconnection, are also included, with Rs1.683 billion and Rs1.643 billion allocated.
Moreover, projects aimed at integrating solar power of 350 MW allocated Rs5.18 billion; 220 kV Gharo Step-up Grid Station for Interconnection of 600 MW Solar-WPPs Rs7.16 billion and for associated transmission line Rs5.66 billion. The plan also includes investments in a Current Limiting Reactor and SCADA & other automation equipment, with budgets totalling Rs1.148 billion and Rs8.161 billion respectively.
Enhancing distribution efficiency
Investment plan’s approval, which totalled to Rs136.764 billion in this domain, provisions funds for distribution growth initiatives amounting to Rs29.461 billion with Rs43,323 billion being allocated for the minimisation of losses within the distribution network.
Meanwhile, investments in distribution maintenance, safety measures, AMR and digitisation amounted to Rs29.919 billion, Rs20.546 billion, and Rs4.614 billion, respectively.
Whereas, Rs8.901 million are to be used for the implementation of smart network technologies.
Transmission and distribution losses
The regulatory body also okayed Transmission and Distribution (T&D) losses for the electricity supplier which essentially reflect a gradual reduction over the fiscal years 2023-24 to 2029-30.
Distribution loss percentages decrease from 13.46% in FY2023-24 to 11.48% in FY2029-30, while transmission losses remain constant at 1.30% throughout the period. The overall T&D loss target decreases from 14.58% to 12.63% over the same period.
It is to be noted that any additional reduction in losses beyond the target for a particular year will be shared between consumers and KE in a ratio of 75:25, respectively.
Reacting to Nepra’s approval of its investment plan, KE has said that it is reviewing the regulatory body’s decision and will “remain engaged Nepra, and as we move forward, a sustainable and cost-reflective tariff remains critical for timely execution of the investment plan.”
The investment plan, as per the company, complements its Power Acquisition Program through includes the aim of achieving a 30% share of renewable energy in its generation mix by 2030.
The electricity supplier also noted that it has also received regulatory approval on RFPs of 640MW renewable projects which is another critical link in the mission to enable access to affordable energy for all.
“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 a part of this journey and who will continue to work with us to modernise our infrastructure and prepare us for the future,” KE CEO Moonis Alvi said.
