ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) approved on Tuesday Rs3.83 per unit (47 per cent) reduction in power tariff of all public sector distribution companies for one month. The cut was made to pass on the impact of lower oil prices in the international market.

The decreased rates will not apply to domestic consumers using less than 300 units per month (and called lifeline consumers) under a decision of the PML-N government on the grounds that it was already a subsidised segment of population. Likewise, consumers of K-Electric will also not benefit from this relief.

To the displeasure of power sector bureaucracy, a hearing presided over by Nepra Chairman retd Brig Tariq Sadozai concluded the fuel cost of ex-Wapda distribution companies at about Rs4.27 per unit for December against Rs8.103 per unit charged to consumers under a pre-determined reference price.

Therefore, a relief of Rs3.83 per unit was allowed in the average monthly fuel price adjustment (FPA). It was explained that because of delayed submission of tariff adjustment request by the Central Power Purchase Agency (CPPA), the relief would reach consumers after a two-month delay, i.e. in March.

Lifeline and K-Electric consumers denied relief given due to low oil prices in international market

The CPPA, on behalf of all the 10 distribution companies, had requested for Rs2.64 per unit cut. It said the actual average fuel cost in December stood at Rs5.45 per unit against reference price of Rs8.1037. CPPA Chief Financial Officer Rehan Akhtar presented the fuel price adjustment petition.

Nepra disallowed Rs4.8 billion fuel cost of electricity produced by Nandipur Power Project before its final tariff approval and a similar Rs3bn cost build-up for Guddu Power Project.

The CPPA team, led by Chief Financial Officer Rehan Akhtar, opposed the disallowances, contending the higher FPA cut would create cash flow problems for the power companies. Therefore, such a big decrease in tariff should not be passed on to the consumer.

But the CPPA request was rejected by Nepra.

The CPPA reported that the cost of furnace oil-based power generation stood at Rs7 per unit, compared to Rs5.8 for gas-based plants, Rs13 for diesel-based plants and Rs1.07 for nuclear plants.

Mr Akhtar told Dawn that the regulator was perhaps determined to pass on higher relief to protect interest of the consumers. “We were of the view that some production data was to come from the generation companies, which needed to be reconciled and could be adjusted in next month’s billing. The Nepra thought it should not be delayed”.

Published in Dawn, February 3rd, 2016