ISLAMABAD: The power tariff for all the distribution companies of Wapda is expected to be cut by more than Rs3.65 per unit on account of automatic monthly fuel adjustment to refund a part of around Rs23 billion overcharged to consumers in February this year.

The Central Power Purchase Agency (CPPA) has reported to the National Electric Power Regulatory Authority (Nepra) that the distribution companies had billed the consumers the fuel cost of Rs7.26 per unit in Feb but the actual cost stood at Rs3.62 per unit.

Therefore, there was a need to refund an average Rs3.65 per unit overcharged to consumers. However, the reduced rates would not be applicable to domestic consumers using less than 300 units per month under a decision of the PML-N government that this category of domestic consumers was already a subsidised.

As such, extra charging to about 68 per cent residential consumers would not be refunded and adjusted against circular debt. The CPPA reported that a total of 6.4 billion units of electricity in February.

The CPPA reported that furnace oil based plants contributed about 33.34 per cent power generation at a cost of Rs6.3 per unit. Gas-based plants contributed about 23 per cent power to the national grid at a cost of Rs8.8 per unit.

A negligible contribution of about 0.5pc was made by diesel based plants at a cost of Rs11.78 per unit. Hydropower plants contributed the biggest share of about 35pc among all sources with no fuel cost at all while nuclear plants contributed 6.33pc to the grid at Rs1.15 per unit cost. The fuel cost of electricity imported from Iran stood at Rs10.6 per unit.

Under the automatic fuel price adjustment mechanism, the power companies are entitled to bill consumers at a reference tariff pre-fixed by Nepra and then adjusted in the consumer bills on the basis of actual invoices with a gap of two-three months, depending upon the cash flow situation of the distribution and circular debt targets of the governments.

Power bills recovery

APP adds: Meanwhile, Finance Minister Ishaq Dar Monday emphasised the need for maximising electricity recoveries against billed amounts for the financial viability and improvement of distribution companies.

The minister was chairing a meeting to review financial matters related to the power sector, including recovery position of electricity bills from different categories of consumers.

The minister appreciated the steps taken by the ministry and the distribution companies (Discos) for enhancing the recoveries. Earlier, Secretary Water and Power briefed the meeting about the recovery process and the efforts made by the ministry and the Discos for ensuring that the billed amounts are recovered in full, so as to improve the financial position of the distribution companies.

He said that improved finances will help the companies to ensure maximum supply of electricity to the consumers in the approaching summer season.

He briefed the minister on the financial requirements of the power sector during the last quarter of the current financial year.

Published in Dawn, March 29th, 2016