ISLAMABAD: Despite 79 per cent of power generation coming from cheaper local fuels, the government has sought clearance from the National Electric Power Regulatory Authority (Nepra) to extract about Rs23 billion additional in fuel cost adjustment (FCA) from consumers for electricity consumed in March.

The Central Power Purchasing Agency (CPPA) — a subsidiary of the Power Division — has demanded Rs2.94 per unit additional fuel cost to recover from consumers through May bills.

The proposed additional FCA is almost 46pc higher than the pre-fixed fuel cost of Rs6.44 per unit already charged to consumers in March. This raises questions about the power sector bureaucracy’s capabilities to forecast fuel costs even for 6-7 months. In recent months, the additional FCAs have ranged between 50 and 115pc higher than the pre-determined fuel costs notified at the start of the current fiscal year.

Nepra to consider petition for Rs2.94 per unit FCA rise on 26th

This FCA is on top of about a 26pc increase in the annual base tariff and another 10pc hike under the quarterly tariff adjustment currently in place and being charged to consumers at Rs2.75 per unit. As a result, consumers continue to pay excessive bills despite lower consumption patterns. This was despite more than 79pc of electricity coming from cheaper local resources. Nepra has accepted the request for a public hearing on April 26.

The higher proposed FCA for March is apparently mainly due to higher domestic coal and gas prices, although the use of imported fuels like coal, diesel, and furnace oil remained zero. LNG was relatively cheaper, and the exchange rate remained stable.

In a petition, the CPPA, acting as commercial agent of Discos, demanded an additional FCA of Rs2.94 per unit in the May bills for electricity consumed in March. It claimed that the reference fuel cost for March was Rs6.44 per unit, but the actual fuel cost rose to Rs9.38 per unit. The average fuel cost in February also stood at about Rs9.42 per unit. It said about 8,023-gigawatt-hour (GWh) of electricity was generated at an estimated fuel expenditure of Rs66.7bn (Rs8.3 per unit) in March, of which 7,756 GWh energy was delivered to Discos at the cost of Rs72.67bn (at Rs9.38 per unit).

The data showed declining consumption trends. The consumption in March was also 8.3pc lower than same month (8,459Gwh) last year. The Rs2.94 per unit FCA for March this year is more than double the Rs1.17 per unit FCA of same month last year.

This included the biggest share of hydropower at 28pc in March against its 25pc share in February. Hydropower has no fuel cost.

Published in Dawn, April 18th, 2024