Rs3.50 per unit hike in power tariff on the cards

Published January 28, 2021
The National Electric Power Regulatory Authority (Nepra) on Wednesday hinted at increasing electricity tariff by about Rs3.50 per unit over the next few days. — AFP/File
The National Electric Power Regulatory Authority (Nepra) on Wednesday hinted at increasing electricity tariff by about Rs3.50 per unit over the next few days. — AFP/File

ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) on Wednesday hinted at increasing electricity tariff by about Rs3.50 per unit over the next few days.

At a public hearing on monthly fuel price adjustment (FPA) for distribution companies of ex-Wapda, the case officers of Nepra explained that Rs1.95 per unit increase in base tariff would be notified in a few days across the country, while another Rs1.30-1.60 per unit FPA would be on top of that base price increase.

The case officers were responding to questions from Nepra’s member tariff Saifullah Chattha for the purpose of explanation to the participants.

The annual impact of Rs1.95 per unit increase in base tariff would yield about Rs200 billion and would also be applicable to K-Electric consumers. On the other hand, the monthly FPA for December 2020 electricity consumption would yield about Rs9-10bn for a month and would be applicable to all distribution companies, except K-Electric.

The case officers also explained that application of tariff increase would become part of the tariff in the coming billing cycle in February. They said that about Rs51bn worth of past FPAs pending for a few months owing to insufficient evidence would also have to be passed on to consumers in due course.

Nepra chairman Tauseef H Farooqi, who presided over the public hearing, said the regulator would examine data pertaining to fuel mix but hoped that FPA would range between Rs1.30 and Rs1.60 per unit. However, a final decision would be made in a few days.

The petition for FPA-based tariff increase was filed by the Central Power Purchasing Agency (CPPA) on behalf of distribution companies (Discos) to generate about Rs13bn in additional revenue for them. The CPPA has claimed an additional cost of Rs1.81 per unit for December.

It was highlighted that power generation companies had to utilise furnace oil for power generation due to serious LNG and gas shortages during December when both these fuels were diverted to residential sectors for heating. There was an additional impact of Rs7.9bn in December due to lower than estimated LNG availability and resultant furnace oil and diesel utilisation; however, maximum availability of coal-based generation helped reduce this impact significantly.

The regulator was informed that FPA would have been only 18 paisa per unit in the absence of furnace oil component instead of Rs1.60. All three major LNG-based plants of about 3,900MW in Punjab remained closed for quite some time during December as the Petroleum Division failed to arrange committed LNG quantities.

Nepra chairman Farooqi and member Chattha told the power companies that Rs51bn of previous FPAs was sort of a liability that would have to be passed on to consumers starting February, otherwise a resultant cash flow problem would lead the power companies to borrow from banks and ultimately consumers would also have to bear the cost of mark-up.

The CPPA in its petition said it had charged consumers a reference fuel tariff of Rs4.46 per unit in December, but the actual fuel cost turned out to be Rs6.27 due to adverse fuel mix and increase in fuel price. Hence, it claimed to charge Rs1.81 per unit additional cost to consumer.

Total energy generation from all sources in December was recorded at 7.879 gigawatt hours (GWh) at a total fuel cost of Rs37.7bn or Rs4.78 per unit. After accounting for 3.26pc transmission losses, about 7.564GWh energy was delivered to Discos at Rs47.4bn at the rate of Rs6.27 per unit.

The data showed that hydropower generation share dropped to 23pc in December from 40pc in November. The largest contribution came from coal having 29pc share in December when compared to 15pc in November, mainly because of almost non-availability of LNG and hydropower in the last part of December.

Published in Dawn, January 28th, 2021

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