Electricity consumers will have to bear an additional cost of Rs3 per unit in their February bills, as the country’s power regulator said generation plants used expensive fuel in December.
The National Electric Power Regulatory Authority (NEPRA) has notified the decision on fuel charge adjustment (FCA) for December for all electricity distribution companies.
The increase in power rates drew sharp criticism from opposition parties, which described it as proof of government’s mismanagement and feared that it would fuel inflation.
According to NEPRA’s notification, the increase of Rs3.0968 per kilowatt hour (or unit) will be applicable to consumers of all power distribution companies except citizens who consume up to 50 or fewer units per month and the users of Karachi-based utility K-Electric.
Consumers can see the increase in their February power bills separately mentioned as fuel charge adjustment in respect of December.
NEPRA collected the information about the actual fuel charges and other cost factors from the Central Power Purchasing Agency Guarantee Ltd (CPPA-G).
According to details provided by the CPPA-G, the actual pool fuel cost for December was Rs8.6573 per unit against the reference fuel cost component of Rs5.5347 per unit.
After reviewing the information, NEPRA finalised the increase of Rs3 per unit to be passed on to consumers.
The regulatory authority made the decision on Feb 1 after a virtual public hearing on the Zoom meeting app over the fuel cost and invited comments and objections from any interested or affected person.
Incidentally, there was no representation from the Wapda Power Privatisation Organisation, Sui Southern Gas Company Ltd, Sui Northern Gas Pipelines Ltd and the Ministry of Finance.
NEPRA’s decision highlights that a major portion of the country’s power generation basket is based on imported fuel and therefore prone to global oil prices and the exchange rate.
“The primary reason for recent higher monthly FCAs is due to increase in prices of different fuels in the international market and the devaluation of the rupee,” NEPRA said in the notification.
Besides, certain efficient power plants were not fully utilised and instead energy from costlier power plants using residual fuel oil (RFO) and high-speed diesel (HSD) was generated at the cost of up to Rs11.388 bn during December 2021, it said.
The notification also highlights that the National Power Construction Corporation (NPCC), the National Transmission and Despatch Company (NTDC) and CPPA-G have been directed to provide complete justification for purchasing costly power.
The authority also observed that the information submitted by the CPPA-G was not as per the standards set by NEPRA.
The decision noted that around 353.26 gigawatt hours were generated from RFO and 250.56 GWh from HSD in December, whereas the capacities of efficient power plants using regasified LNG, coal and gas were underutilised.
NEPRA has decided to deduct Rs4.81 million provisionally until NPCC, NTDC and CPPA-G provide the required details along with complete justification in this regard.
The power regulator said that the CPPA-G purchased 36.4712 GWh from Iran’s Power Generation, Distribution and Transmission Company (known as Tavanir) in December at the cost of Rs483.9 million.
But the cost of electricity purchased from Tavanir was on a provisional basis, subject to its adjustment once NEPRA decides the extension in the contract between CPPA-G and the Iranian company.
“The cost being allowed on a provisional basis is to avoid piling up of the cost and one-time burdening of the consumers in future,” the NEPRA notification said.
The authority also mentioned that the fuel cost of certain power plants had not been claimed by the CPPA-G as per the approved rates. During the scrutiny of submitted data, NEPRA noted that energy reported by the CPPA-G from the Rahim Yar Khan Mills Ltd’s bagasse-based power plant was not as per the joint meter reading report.
The regulator also adjusted 11.719 million units instead of 7.971 million units reported by CPPA-G which resulted in an increase of Rs22m in December’s fuel cost.
NEPRA has also highlighted that the CPPA-G claimed Rs2.052bn on account of previous adjustments in December fuel charge adjustments.
The CPPA-G informed the authority that electricity distribution companies purchased 7.87 GWh from captive power plants in December at the cost of Rs35.355m.
OPPOSITION: PML-N President and Opposition Leader in the National Assembly Shehbaz Sharif rejected the increase in electricity prices by more than Rs3 per unit.
“Imran Niazi should resign instead of taking people’s lives through high inflation,” he said, referring to Prime Minister Imran Khan. “In four years, it has been proved repeatedly that the government has nothing to offer but inflation for the masses and corruption.”
He said the relief could be provided to the people only by getting rid of this “useless, incompetent and corrupt government”.
“After this move of increasing electricity rates that will have a serious inflationary impact, Imran Niazi is ready to drop petrol bombs on the people of this county,” he said. “We will save the people from this tyrannical government through a no-confidence motion.”