As fuel cost rises, NEPRA increases power tariff by Rs0.50 per unit for June

Overall, consumers will bear an additional burden of Rs6.5 billion

ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) has increased the power tariff by Rs0.50 per unit on account of fuel cost adjustment for June 2018 following consumption of expensive furnace oil in electricity production.

This is for the second time in recent months that consumers are facing an increase in electricity tariff in the wake of furnace oil use in electricity production in sheer violation of a merit order.

Earlier, the regulator had jacked up power tariff by Rs1.25 per unit under the fuel cost adjustment mechanism for May 2018 because of more focus on furnace oil and less imports of cheaper liquefied natural gas (LNG) in the absence of firm orders from power producers.

Nepra increased the tariff on Tuesday after conducting public hearing on a petition filed by the Central Power Purchasing Agency-Guarantee (CPPA-G). It had sought a tariff increase of Rs0.70 per unit, but the regulator raised the price by Rs0.50.

Overall, the power consumers will be facing a burden of Rs6.5 billion due to the higher tariff.



The CPPA-G had proposed a less-than-expected increase in power tariff for June as furnace oil consumption fell and hydroelectric and LNG-based power generation rose compared to May 2018.

For the past few years, the consumers had been enjoying tariff cuts in the wake of sharply lower global crude oil prices despite the imposition of surcharges of Rs2.3 per unit during tenure of the previous Pakistan Muslim League-Nawaz (PML-N) government.

Statistics suggest eight LNG cargoes were imported in May as power producers could not place firm demand orders, which resulted in a larger increase in tariff. However, for June, 11 cargoes were imported against the total capacity of 12 cargoes, therefore, a slimmer tariff increase was proposed.

The share of LNG-based electricity generation came in at 23.85% in May, which inched up to 25.18% in June. Hydroelectric power generation contributed 18.30% to the energy mix in May, which jumped to 27.79% in June.

Total power generation for June also increased from 12,117 gigawatt-hours (Gwh) in May to 12,913.86 Gwh in June. Transmission and distribution losses stood at 2.36% or Rs0.13 per unit.



According to the merit list, LNG stands at second place after domestic natural gas for consumption as fuel in power plants, but the Power Division preferred furnace oil that would put an extra burden on the consumers.

In June, the use of high-speed diesel in power generation also resumed with production of 3.99 Gwh of electricity.

In the month, electricity through LNG fuel was generated at Rs9.31 per unit where furnace oil-based power cost Rs13.12 per unit.

When seen in the context of efficiency, furnace oil power plants have a lower rate of 28% whereas gas-fired plants have a higher level of more than 50%.

The CPPA-G told the regulator that actual electricity generation cost stood at Rs5.69 per unit against the reference price of Rs4.99, registering an increase of Rs0.70 per unit. It requested Nepra to pass the extra cost on to consumers.