Staff Report
ISLAMABAD: The National Electric Power Regulatory Authority (NEPRA) on Thursday increased the electricity rates up to Rs2.5627 per unit under the head fuel charges adjustment (FCA) for the month of June 2024.
NEPRA has allowed state-run power distribution companies (DISCOs) to collect an additional Rs2.5627 per unit from power consumers in their August bills. And, this hike in power tariff will put an additional financial burden of Rs33.45 billion on power consumers that would be recovered from the power consumers in electricity bills of August. However, with the imposition of 18 percent GST, the total burden on inflation-hit masses will increase up to Rs39 billion.
This adjustment on account of the monthly fuel charges adjustment (FCA) for June 2024 is expected to cover the gap between the actual cost of power generation and what was previously charged. The rise in costs was driven by high prices of liquefied natural gas (LNG) and oil, coupled with lower electricity demand
The adjustment will apply to all consumer categories except electric vehicle charging stations (EVCS) and lifeline consumers.
It is relevant to note that DISCOs had sought permission to charge an additional Rs2.63/unit from power consumers in their August bills. It claimed that the reference fuel cost for June was set at Rs7.14 per unit, but the actual fuel cost turned out to be Rs9.77 per unit.
During a public hearing on July 31, the CEO of Central Power Purchasing Agency (CPPA) while presenting the case before the Authority submitted that there was slightly lower generation from Hydro and Local Coal as compared to generation assumed in reference tariff.
He also explained that Neelum Jhelum could not be operated due to the forced outage and consequently no payments were made to Neelum Jhelum.
However, certain fuels which were not a significant part of the reference mix such as RLNG were operated because of system requirements and contractual obligations. The actual generation remained 10 percent lower than anticipated.
A representative of NTDC/NPCC submitted that on a year-on-year basis the generation has decreased by 2 percent. It was further submitted that the peak demand during the month was 22,971 MW while the lowest demand achieved during the month was 10,092 MW.
CPPA said that in June, 13,459 gigawatt-hours (GWh) of electricity were generated at a fuel cost of Rs119.7 billion (Rs8.89 per unit), with 13,071 GWh delivered to distribution companies at Rs127.7 billion (Rs9.77 per unit).
Consumption dropped 1.9 percent from June 2023, while the Rs2.63 per unit fuel cost adjustment (FCA) for June 2024 was 40 percent higher than last year’s Rs1.88/unit.
Hydropower led the supply with 35 percent, followed by LNG at 18 percent, nuclear at 14.85 percent, local coal at 11 percent, and local gas at 8.66 percent. Imported coal contributed 4.74 percent. The cost of LNG-based generation rose to Rs26.32 per unit, while domestic gas increased slightly to Rs13.93 per unit. Local coal costs fell to Rs11.1 per unit, and imported coal dropped to Rs15.5 per unit.
Renewable sources such as wind, bagasse, and solar contributed 5.14% of the grid’s supply, with bagasse generation costs remaining steady at Rs6 per unit.
Meanwhile, the Minister for Power Division Sardar Awais Ahmad Khan Leghari on Thursday on Thursday announced the formation of Task Force that would also review the agreements with Independent Power Producers (IPPs) and find out possibilities of shutting down old power plants to reduce the rate of capacity payments.
At present, the consumers are paying Rs 2.2 trillion to Rs 2.8 trillion every year on account of capacity payments.
He said that power sector had a key role in the daily life of the people and even the economy.
He said that Prime Minister had decided to conduct exercise to bring reforms in the power sector.
Power Minister said that they had realized that entire government had different stakeholders that would coordinate to enforce reforms in power sector.
He said that government wanted to introduce reforms immediately and decided to privitize power distribution companies.
He said that government was assessing to reduce the electricity costs and even considering the taxes cut.
He said that Task Force would review the power sector in details.
Different companies relating to SECP were also included in this task force.
He said that on the directives of Prime Minister Shehbaz Sharif, Task Force on Implementation of Structural Reforms in Power Sector had been constituted to review all the aspects for improvement in power sector.
Talking to media persons along Co-Chairman of the Task Force Muhammad Ali, after first meeting of the Task Force, the minister said that power sector was the backbone of any economy and the government was committed to bringing reforms to enhance its efficiency.
He said that Task Force in its first meeting had considered 20 to 22 key points to bring reforms in the power sector.
He maintained that Task Force would consider the all issues in the power sector to bring efficiency.
Speaking on the occasion, Co-Chairman of the Task Force, Muhammad Ali said that the Task Force would also look into the issues of IPPs besides taking steps to bring generation cost of the electricity.
Muhammad Ali said that all departments had representation in this and it was looking into IPPs issue to cut generation cost. He said that government was also looking into reducing burden on the consumers.
Government also wanted to supply electricity directly to the consumers without involvement of the government and the government will do this through wheeling charges mechanism.
