Pakistan owes $1.2bn to Chinese power producers

Published September 28, 2023
Ex-Wapda distribution companies sold about 15.5 billion electricity units in August. — White Star/file
Ex-Wapda distribution companies sold about 15.5 billion electricity units in August. — White Star/file

ISLAMABAD: The government on Wednesday reported the outstanding payables to the Chinese power producers at around Rs360 billion (about $1.25bn) as it pleaded to charge Rs1.83 per unit additional cost from consumers of ex-Wapda distribution companies (Discos) in October.

The National Electric Power Regulatory Authority (Nepra), which held a public hearing on the request of the Central Power Purchasing Agency (CPPA) for recovering an additional Rs28.3bn or Rs1.83 per unit fuel cost adjustment in Discos’ tariffs for electricity consumed in August, noted that a series of cheaper power plants remained unutilised because of transmission constraints, thus adding unnecessary burden on consumers.

It would announce its decision in a few days after verification and reconciliation of data.

The CPPA reported that fuel cost in August this year was cheaper at about Rs8.29 per unit when compared to Rs9.9 per unit of the same month last year because of higher generation from local resources. It was pointed out that about 3,000MW of relatively cheaper electricity in the south — Thar coal, wind and solar — could not be evacuated to consumption centres in the north due to transmission constraints and expensive furnace oil-based plants had to be operated to meet 13pc higher demand.

Govt requests regulator to approve Rs1.83 per unit hike for August

At the same time, however, heavy loadshedding was applied to consumers in the south including Karachi. It was also highlighted that a higher supply in southern parts could have reduced loadshedding, thus minimising the need for transmission of generation to northern parts.

The National Transmission and Despatch Company (NTDC) reported that among other reasons the grid constraints could not be removed because of strict import controls and it could not open letters of credit last year for imports which comprised almost 80pc of transmission equipment. The representatives of the CPPA — a subsidiary of the Power Division and commercial agent of the Discos — reported that payables to Chinese IPPs stood at about Rs360bn but were unaware of the total amount of receivables and default amounts recoverable from public and private sector consumers.

The Nerpa members pointed out that the higher FCA was despite the fact 26pc increase in annual base tariff in July this year based on which the reference fuel tariff for the current year had been set.

Nepra has already cleared 18pc quarterly adjustments to be recovered from consumers in the coming months. The higher FCA was also even though over 74pc power generation came from local cheaper fuels like hydro, coal, gas, nuclear, wind, solar and baggase.

The CPPA reported on behalf of Discos that the consumers had been charged at a reference fuel cost of Rs6.65 per unit in August, but the actual cost turned out to be Rs8.47 per unit, hence an additional charge of Rs1.83 per unit should be allowed.

The additional cost is also despite the country’s hydropower plants made the healthiest contribution of almost 38pc to the overall national power grid in August, against 37pc in July and 26.96pc in June. Hydropower has no fuel cost.

The LNG-based power generation at 17.17pc stood second in August, down from 19.67pc in July and 18.55pc in June. The third largest share of 12.79pc in August came from nuclear power plants, down from 14.2pc in July and 13.54pc in June this year.

This was followed by local coal-based generation that stood at 10.3pc and that of imported coal at 4.51pc. This is the first time that Nepra has started separately reporting the local and imported coal-based power generation which shows a massive difference. In July this year, the cumulative (local and imported) coal-based generation stood at 14.69pc compared to 17.75pc share in June.

Power supply from domestic gas maintained its downward journey and contributed just 7.60pc to the national grid in August against 7.61pc in July, 8.54pc in June, 10.35pc in May and 12pc in April.

Published in Dawn, September 28th, 2023

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