Staff Report
ISLAMABAD: The National Electric Power Regulatory Authority (NEPRA) has issued a warning regarding the recently announced Winter Electricity Package, highlighting concerns over increased fuel costs that could burden electricity consumers.
The package, introduced by the Power Division, aims to encourage higher electricity consumption during the low-demand winter months by offering reduced rates on incremental usage.
NEPRA’s letter to the Power Division pointed out that incremental electricity consumption under this scheme could push fuel charges beyond Rs. 26 per unit. It cautioned that while the initiative promotes demand growth, the reliance on costly re-gasified liquefied natural gas (RLNG) to meet energy requirements may lead to higher monthly Fuel Charges Adjustments (FCAs) for all consumers.
The regulator (NEPRA) noted that an 8% decline in electricity demand compelled the government to implement the Winter Package. To support the package, the Power Division plans to import 34 LNG cargoes between December 2024 and February 2025. The projected RLNG supply for the power sector includes an average daily delivery of 385 million cubic feet (MMCF) in December, reducing slightly to 320 MMCF per day in January and February.
Reduced hydropower generation during winter will necessitate a heavier reliance on RLNG, which is significantly more expensive. NEPRA emphasized that the use of high-cost RLNG could outweigh the benefits of the package, impacting both operational costs for power producers and affordability for consumers.
According to available documents, a high-level Zoom meeting was held on September 1, 2024, involving officials from the Ministry of Energy’s Power and Petroleum Divisions, along with representatives from the National Power Control Center (NPCC), Central Power Purchasing Agency (CPPA), Sui Northern Gas Pipelines Limited (SNGPL), Sui Southern Gas Company Limited (SSGCL), and Pakistan LNG Limited (PLL). The meeting focused on RLNG allocation to implement the Winter Package.
The Power Division outlined RLNG requirements, which include both average demand and flexible demand. Flexible demand refers to RLNG supply on an “as-and-when-required” basis, without firm commitments. The Petroleum Division presented its LNG cargo procurement schedule, confirming 12 cargoes for December, 10 for January, and 9 for February.
While the Petroleum Division agreed in principle to redirect RLNG from other sectors, including domestic and captive users, it stressed that resource allocation would depend on availability and national demand.
NEPRA, while supporting the Winter Demand Initiative in principle, reiterated that the estimated marginal cost of Rs. 26.07 per kWh for incremental consumption could significantly impact consumer bills. It advised the Power Division to implement efficient fuel management strategies and prioritize low-cost energy sources to mitigate the financial burden.
As the government works to balance energy sustainability with consumer affordability, NEPRA urged proactive planning to address the rising cost of fuel and ensure the long-term viability of the Winter Package.
