ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) directed the Power distribution company of ex-Wapda on Tuesday to refund 35 per cent of fuel costs overcharged to consumers in March.

At a public hearing presided over by Nepra Chairman retired Brig Tariq Sadozai, Nepra approved a Rs2.83 per unit (35pc) cut in electricity tariff for all public sector distribution companies for one month to pass on the impact of lower international oil prices to consumers.

The Central Power Purchase Agency (CPPA), which had filed a request for monthly fuel price adjustment (FPA), also put on record that furnace oil-based power generation was now cheaper than gas-based generation because of imported re-gasified liquefied natural gas (RLNG) factor.

LNG-based generation becomes costlier than furnace oil

The reduced rates will not be applicable to all agricultural and domestic consumers using less than 300 units per month under a government decision because this was already a subsidised segment of the population. Likewise, consumers of K-Electric will not benefit from this.

The CPPA had solicited Rs2.78 per unit reduction in fuel-based power tariff for March claiming that the actual cost stood at Rs5.3 per unit against reference tariff of Rs8.09 per unit.

This, however, did not impress the regulator which pronounced at least two cost factors “illegal”, thus allowing relatively higher refund of Rs2.83 per unit to consumers.

During the hearing, Nepra’s case officers explained that the regulator had approved a reference fuel price of Nandipur power plant at Rs4.52 per unit but the authorities had invoiced its generation at Rs6.83.

Chairman Sadozai expressed displeasure over this and said that it was in violation of Nepra rules and established terms of tariff. The regulator, therefore, disallowed Rs255 million additional cost on account of the Nandipur plant.

He was also displeased over the utilisation of the Quetta thermal power station which was not allowed under the generation licence.

“The utilisation of this plant is illegal because it does not have a generation licence,” Mr Sadozai said, adding that a criminal case could be filed against the CPPA and the National Transmission and Dispatch Company (NTDC).

However, NTDC general manager Mohammad Ilyas and CPPA’s Mohammad Rehan did not offer any explanation.

Due to expensive power generation, Nepra had previously removed the Quetta plant from the licence at the request of the generation company. It was reported that the plant supplied 7.6 gigawatt hours (Gwh) of electricity at a rate of Rs8.60 per unit. Hence, the regulator also disallowed Rs65 million cost of power generated by the Quetta plant, putting the total reduction at Rs2.83 per unit.

In conclusion, the Nepra chairman was asked if the regulator’s directives for observing merit in utilisation of power plants had been adhered to by the power authorities. Mr Sadozai said they had not changed their behaviour and were continuing as before. He said the regulator had initiated legal process for violation of merit order.

The CPPA reported that furnace oil-based power generation cost stood at Rs5.13 per unit, compared to gas-based cost of Rs5.86 and Rs11.64 for diesel-based plants, no fuel cost for hydropower plants and Rs1.16 per unit of nuclear plants. The fuel cost of electricity imported from Iran stood at Rs10.6 per unit.

The CPPA reported that a total of 6.58 billion units of electricity were supplied to distribution companies in March at a total cost of Rs35 billion.

It said hydropower contributed about 27.6pc generation while furnace oil-based plants over 29.6pc. Gas-based plants generated 33pc electricity for the national grid, followed by 6.52pc by nuclear and 0.18pc by diesel-based plants.

Published in Dawn, April 27th, 2016