Staff Report
ISLAMABAD: Power Distribution Companies (DISCOs) and K-Electric have recently submitted requests to the National Electric Power Regulatory Authority (NEPRA) for an increase in electricity tariffs, raising concerns among consumers in Pakistan.
DISCOs are seeking a substantial Rs 2.05 per unit hike, while K-Electric has requested a Rs 1.49 per unit increase in power tariff for the month of May 2023 under the fuel charges adjustment (FCA).
NEPRA has scheduled separate hearings on July 5, 2023, to review the proposed tariff adjustments, which are expected to have a significant impact on consumers nationwide.
The Central Power Purchasing Agency (CPPA), acting on behalf of DISCOs, has filed an application with NEPRA, urging the regulatory authority to approve the Rs 2.05 per kilowatt hour (kWh) tariff increase. The application states that in May 2023, a total of 12,283.68 gigawatt hours (GWh) of energy was generated at a cost of Rs 9.7205/kWh. Out of this, 11,954.36 GWh was delivered to DISCOs at a cost of Rs 9.8817/kWh. These figures indicate a significant difference between the generation cost and the cost passed on to consumers.
Furthermore, K-Electric, the sole power distributor in Karachi, has requested a positive fuel charge adjustment (FCA) of Rs 1.49/kWh for May 2023, based on the multi-year tariff (MYT) 2017-2023. If approved, this adjustment would lead to an additional burden of approximately Rs 2.078 billion on electricity consumers in Karachi alone. If approved the tariff hike for Karachiites will add additional burden who are already grappling with financial difficulties caused by rising inflation, economic instability and sky high power prices.
The fuel charges adjustment is primarily justified by the fluctuations in global fuel prices and changes in the energy generation mix. While it is understandable that variations in fuel costs need to be reflected in the electricity tariffs, the burden of these adjustments falls squarely on the shoulders of the consumers. The power sector policies mandate that these costs be passed on to customers for a single month, subject to NEPRA’s scrutiny and approval. However, it is crucial to ensure that any tariff adjustments are fair, reasonable, and proportionate to avoid overburdening the already struggling populace.
NEPRA has issued public hearing notices, inviting all interested and affected parties to participate and voice their objections during the upcoming hearings. Power consumers across the country are advised to prepare for the potential additional burden, as NEPRA is likely to grant approval for the proposed adjustments in power prices for both DISCOs and K-Electric under the FCA for May 2023 and the quarterly adjustments.
Critics argue that while the power sector aims to maintain financial stability and recover costs, there is a need for greater transparency and accountability in tariff-setting mechanisms. The public demands a fair representation during the hearings to ensure their voices are heard and their concerns are duly considered.
The outcome of the NEPRA hearings will have far-reaching implications for the affordability of electricity for households, businesses, and industries across the country. As the cost of living continues to rise and the economic challenges persist, any increase in electricity tariffs has the potential to further burden consumers and hinder economic growth. It is essential for NEPRA to carefully assess the requests, taking into account the impact on the public and striking a balance between the interests of the power sector and the welfare of the citizens.
As the hearings approach, the public eagerly awaits NEPRA’s decision, hoping for a fair and equitable resolution that protects their interests and ensures sustainable access to affordable electricity in Pakistan.
