NEPRA cuts power tariff by Rs4.11 a unit

Published: March 2, 2016


ISLAMABAD: The country’s top power regulator approved on Tuesday a Rs4.11 per unit cut in electricity tariff for consumers of power distribution companies (Discos) on account of fuel adjustment for the month of January 2016.

This decision was taken in the National Electric Power Regulatory Authority (Nepra) hearing presided over by Nepra Chairman Brig (retd) Tariq Saddozai.

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According to the applicable criteria – tailored in light of the agreements with lenders like the International Monetary Fund (IMF) and the World Bank – only those consumers are qualified for refund who consume above 300 units a month.

This implies that lower income groups are not eligible for a refund.  The new tariff is also not applicable to K-Electric and agriculture consumers.

The authority also announced plans to take legal action against the Central Power Purchasing Agency (CPPA) and the National Transmission and Dispatch Company (NTDC) for purchasing expensive electricity from power plants and not sharing real-time data with the regulator despite repeated reminders.

The CPPA, in its tariff petition, had recommended a refund of only Rs3.38 per unit in January.

Hearing CPPA’s tariff petition filed under monthly fuel price adjustment mechanism, Nepra ruled that the consumers of Discos will be refunded Rs20 billion for January in February bills. According to the CPPA, fuel cost of electricity delivered to Discos was Rs6.4817 per unit in January 2016 against a reference price of Rs9.8670 per unit.

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In January 2016, the total energy – generated from all sources at a cost of Rs37.5 billion – was 6,770 GWh. However, the CPPA delivered 6,503 GWh to Discos at a cost of Rs42.151 billion.

The financial impact of transmission losses has been recorded at 3.79 per cent or 256.43 GWh.  However, the CPPA failed to submit total amount of transmission losses, claiming that per unit cost of transmission losses stood at Rs0.2560 per unit.

In January, hydel generation was recorded at 842.95 GWh which was 12.45 per cent of total generation. Generation through high speed diesel (HSD) was 367.30 GWh (5.43 per cent) while its cost was Rs12.42 per unit.

Nepra rejected the CPPA’s Rs4.42 billion claim as it purchased expensive electricity from Nandipur Power Project.  According to Nepra officials, the CPPA procured expensive electricity on open cycle due to which fuel cost increased. Nepra said the CPPA would not be allowed to pass on Rs4.42 billion to consumers.

Nepra chairman expressed serious displeasure over getting electricity from expensive thermal power plants and directed Nepra officials to take strict legal action against the responsible organisations.

He argued that in December 2015, the CPPA produced expensive electricity from diesel and furnace oil based power plants and did not run plants which produce cheap electricity. Nepra had given instructions to the CPPA in January to desist from repeating this in future but the CPPA did not comply.

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Nepra’s Senior Member Khawaja Naeem stated that the NTDC had been directed to provide access to real time data of power plants and merit order regularly but it did not follow the instruction.

A Nepra official maintained that electricity could be produced from Saba Power and Sepcol Power at Rs5 per unit but no one bothered to do so and these plants were dysfunctional. “These plants, which are near the load centre, are property of Pakistan because their price has already been paid,” he said.

Nepra chief also asked as to why electricity is not being purchased from 747 MW Guddu, Engro and Foundation’s plants. The NPCC General Manager Muhamamd Ilyas said these plants were closed due to problems in transmission line, adding that the issue would be resolved in three months.

Published in The Express Tribune, March 2nd, 2016.

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