ISLAMABAD: Amid lower availability of hydropower due to annual canal closure, the National Electric Power Regulatory Authority (Nepra) on Monday finalised Rs5.95 per unit increase in tariff for ex-Wapda distribution companies (Discos) on account of additional monthly fuel cost adjustment (FCA) during the current billing month to mop up about Rs58 billion additional funds.

The additional FCA of Rs5.95 per unit was finalised by the regulator at a public hearing presided over by Nepra Chairman Tauseef H Farooqui against a demand for Rs6.10 per unit increase.

The Central Power Purchasing Agency (CPPA), on behalf of all ex-Wapda Discos had sought about 94pc increase in their fuel price adjustment at the rate of Rs6.10 per unit (kwh) for electricity sold in January. The regulator, however, finalised Rs5.95 per unit additional FCA after minor disallowances. The representatives of CPPA said the major increase in FCA against the reference rate was because of cancellation of a couple of LNG cargoes.

The Nepra chairman and members questioned the inability of the quarters concerned to ensure sufficient LNG against firm orders from the power sector and desired that a written statement be submitted as to who was responsible for lower fuel arrangements. They, however, noted that it was highly unfair to put additional burden on consumers for no fault of their own.

While concluding the public hearing, Mr Farooqui said the FCA for January has been worked out at about Rs5.95 per unit but a notification would be issued in a couple of days after verification of evidence and documentation.

It has become increasingly common that reference fuel costs approved by the government and the regulator turn out to be highly unrealistic, a question mark on their economic forecasting and analytical skills. In recent months, the actual fuel costs have ranged 56pc to 116pc higher than the reference rate. This results in sudden price shocks to consumers on account of monthly fuel adjustments on top of repeatedly increasing base power tariffs apparently at the behest of international lenders.

On behalf of Discos, CPPA has claimed the consumers were charged a reference fuel cost of Rs6.5124 per unit in January, but the actual cost turned out to be Rs12.62 per unit, hence an additional charge of about Rs6.10 per unit to consumers. The regulator calculated the actual fuel cost at Rs12.46 per unit, with additional fuel price adjustment of Rs5.95 per unit.

The higher electricity rates would be charged to all consumers in the current billing month (March) except those using less than 50 units per month. This tariff is not applicable to K-Electric (KE) consumers directly, although a part of it subsequently becomes part of KE’s tariff adjustments on account of its import from national grid.

The share of hydropower supply in the overall basket was reported at just 5.83pc in January compared to 20pc in December, 33.2pc in November and 23.26pc in October. Hydropower has no fuel cost. This was mainly because of canal closures for annual maintenance for more than 20 days.

As a result, the biggest contribution of over 33pc in overall power supply came from coal-based power plants. This was significantly higher than 24pc coal-based power supply to the national grid in December and 16.3pc in November. Its fuel cost also increased to Rs14.10 per unit in January from Rs13.31 per unit in December, 13.14 per unit in November and Rs11.37 in October.

This was followed by another major chunk of 14.37pc supply each coming from nuclear power and domestic gas and then 14.07pc in furnace oil-based supply in January.

In comparison, nuclear power plants had contributed 17.6pc electricity to the national grid in December. The fuel cost of nuclear electricity also increased to Rs1.075 per unit in January against Rs1.05 per unit fuel cost.

Yet another big contribution of about 14.37pc came from domestic gas at an unchanged generation cost of Rs7.75 per unit. The domestic gas had produced 13.8pc electricity in December, 13pc in November, 9.67pc in October, 8.9pc in September and 8.17pc in August.

Published in Dawn, March 1st, 2022

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