ISLAMABAD: The electricity distribution companies have demanded an increase of more than Rs7.96 per unit, to be reflected in the bills of July, due to the high cost of power produced from diesel and furnace oil for May.

The Central Power Purchasing Agency (CPPA) has filed an application to the power sector regulator that the total cost of electricity production from various sources during the month of May was Rs13.8969 per unit.

However, it was Rs7.96 over the benchmark of Rs5.93 per unit set by the National Electric Power Regulatory Authority (Nepra) in terms of fuel adjustment charges.

The CPPA is a market operator facilitating the power market transition from the current single buyer to a competitive market, and among its responsibilities is power procurement on behalf of electricity distribution companies (Discos).

As per the legal requirements, Nepra has called a public hearing on the matter on June 27, and all concerned institutions and citizens have been invited to the hearing to present their point of view, mainly against the demands by the CPPA.

But traditionally, the demands of the CPPA regarding fuel price adjustments are accepted by the regulator, as it is difficult to prove that the high cost of fuel was due to any negligence or mismanagement on the part of the CPPA.

The application filed by the CPPA has highlighted that the most expensive electricity was generated from furnace oil at a rate of Rs33.67 per unit, and the cost of power generated from high-speed diesel (HSD) was Rs30.09 per unit.

While furnace oil and HSD accounted for only 8.99 per cent of total electricity produced in the country, the high cost of regasified liquefied natural gas (RLNG) generation pushed the overall rate in the power basket upwards.

The cost of electricity generated from RLNG was Rs27.92 per unit, accounting for 22.89pc of total electricity production in the country.

In comparison, the cost of coal-generated power was Rs18.01 per unit, but coal accounted for only 13.77pc of total electricity produced in May.

Nuclear power plants were the cheapest source of electricity in the country for the month, costing Rs1.05 per unit and providing nearly 13pc of net consumption.

In the month, Pakistan imported a very small amount of electricity from Iran, mainly for bordering areas of Balochistan at the cost of Rs18.95 per unit, and a limited percentage of power was generated by the captive power plants of sugar mills at Rs5.98 per unit.

The CPPA has also informed Nepra that there was no power generation from hydro, wind, or solar sources in May due to negligible outflow from the dams and unfavourable weather conditions.

Meanwhile, in a statement, All Pakistan CNG Association (APCNGA) Group Leader Ghiyas Abdullah Paracha has slammed the policymakers for not allowing the private sector to import LNG.

Mr Paracha said that the CNG sector was the only sector that could import LNG for its own consumption, and with the option of having long-term contracts, the sector can import LNG at cheaper rates, which can be supplied for power generation too.

The APCNGA group leader said it would help reduce the overall electricity tariff in the country.

Published in Dawn,June 19th, 2022

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