The previous government increased its reliance on imported gas considering its lower cost, and set up several production plants in the country. PHOTO: FILE
The state-owned power purchasing agency made the recommendation to adjust fuel charges in the tariff for the power produced and sold to the consumers nationwide, except for K-Electric consumers, in May 2018.
In this regard, the National Electric Power Regulatory Authority (Nepra) has scheduled to hear stakeholders on Wednesday (June 27) to decide whether the recommendation for the upward adjustment is justified.
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The agency argued the fuel cost in the tariff has increased to Rs6.61 per kilowatt hour over the reference fuel cost of Rs5.29 in the approved tariff for consumers of the state-owned distribution companies for 2015-16, according to Nepra’s notification.
Hydel production plunges
Apparently, surge in the fuel cost is seen due to massive drop in hydel power production (which carries Rs0 fuel cost in the consumers’ tariff) in May 2018 compared to the same month last year and increased reliance on expensive sources of power production like imported gas; Re-gasified Liquefied Natural Gas (RLNG).
The hydel power production dropped 11.87 percentage points to 18.30% (2,217.61 Gigawatt hour or GWh) in the total production in May 2018 compared to 30.17% (3,326 GWh) in May 2017.
The decrease in the production may be attributed to lower availability of water in dams due to delayed melting of glaciers and climate change.
The situation convinced authorities to take higher power production from RLNG-fired plants. Accordingly, the production from this expensive source surged 16.07 percentage points to 23.85% (2,890.17 GWh) in the energy mix in May 2018 compared to 7.78% (857.31 GWh) in the same month last year.
The cost of power production from RLNG-based plants increased to Rs9.10 per unit in the month from Rs7.11 in the same month last year due to upward trend in the fuel price at international markets.
The imported gas costs power production three times higher (Rs12.47 per unit) compared with the production from locally produced gas at Rs4.84 per unit in the month.
The previous government increased its reliance on imported gas considering its lower cost, and set up several production plants in the country.
The power production from coal-fired plants increased 9.97 percentage points to 12.12% (1,468.95 GWh) in May from 2.15% (237.06 GWh) in the same month in 2017.
The fuel cost of power production from coal also surged to Rs5.76 per unit compared to Rs0.11 in May 2017, according to Nepra.
Although, production from furnace oil-fired plants reduced to 19.30% during the month from 29.99% in May 2017, its cost increased to Rs12.47 per unit in the month from Rs9.40 in the same month last year.
The cumulative power production increased 10% to 12,117.67 GWh in the month compared to 11,023.85 GWh in the same month last year.
Published in The Express Tribune, June 24th, 2018.
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