ISLAMABAD, Oct 17: The power ministry has sought approval of the president to empower power utilities — Wapda and KESC — for a fortnightly automatic fuel adjustment in the electricity tariff through a fixed formula, Dawn reliably learnt.

Sources in the power ministry confirmed that a summary to this effect has been sent to the chief executive who is also minister in charge of the water and power ministry.

These sources said that Wapda has been raising at all forums that fuel adjustment mechanism approved by the National Electric Power Regulatory (NEPRA) required quarterly review of power prices through a lengthy hearing process.

On the other hand, the fuel oil prices were revised by the oil marketing companies on fortnightly-basis. By the time, electricity tariff was revised by Nepra after three months, the utilities continued to lose substantial revenues, these sources said.

To cope with such a situation, Wapda and KESC wanted a well-defined and transparent formula under which they could calculate and pass on increase or decrease in the fuel prices to the consumers through electricity tariff.

Nepra, however, did not agree. It said that the utilities should refer to the regulator after three months for fuel adjustment in electricity tariff and Nepra would, if the revenue difference is more than three per cent, would revise tariff for the next three months. If increase or decrease was less than three per cent then the utilities would have to absorb the difference at its own.

“We considered Wapda’s plea as logical and forwarded the case to the chief executive with the supportive remarks”, said a senior official in the power ministry.

Nepra and Wapda have been in the dispute over the mechanism of automatic fuel adjustment in electricity tariff for the last seven months and the tariff remained unchanged despite public announcement for quarterly reviews and sizable reduction in fuel oil prices. The first review took place in March this year but the tradition could not be continued in June and September.

In this way, the consumers could not benefit reduction in fuel oil prices during the last six months as the power utility continued with the windfall earnings.

The Nepra source said that the regulator was too busy in the licensing, standard codes and reform process to revise prices suo motu but argued it did not even receive a petition for fuel-based tariff revision from any quarter to start proceedings. A KESC petition filed in July last year for tariff increase is still pending with Nepra, these sources said.

The Nepra had introduced an automatic fuel adjustment formula in March this year that allowed Wapda around 12 paisa per unit increase as the furnace oil prices stood at around Rs11,770 per ton.

The Nepra had also decided in its fuel adjustment based tariff determination to revise electricity prices after every three months under an officially notified formula but rejected the Wapda’s demand that a formula be approved that allowed Wapda blanket power to affect the fuel prices at its own whenever required.

After March this year fuel prices fluctuated between 10,000 and 11,000 per ton till June and then once again increased to 11,650 per ton

Wapda said that the principle for fuel adjustment mechanism approved by the regulator contained practical weaknesses and could not be implemented. Wapda was purchasing 1.3 million of fuel oil but it could not affect the same in the consumer end tariff, said Wapda sources.

The Wapda official said that Wapda was purchasing about 100,000 ton per month from Pakistan State Oil because it had the paraphernalia of oil imports but now it has arranged supply of 10,000 tons per month from Shell at Rs92 per ton lower price than PSO.