NEPRA questions furnace oil use in power generation

Reserves judgement on petition seeking tariff hike of Rs1.81 per unit for Dec 2020

ISLAMABAD:

The National Electric Power Regulatory Authority (Nepra) has once again questioned the use of expensive furnace oil instead of re-gasified liquefied natural gas (RLNG) for electricity generation in December 2020.

The regulator has also questioned the diversion of gas from power plants to other sectors during the month.

At a public hearing of a petition of the Central Power Purchasing Agency (CPPA), presided over by Nepra Chairman Tauseef H Farouqi, the regulator reserved its judgement on the application seeking a power tariff hike of Rs1.81 per unit on account of fuel cost adjustment for December 2020.

Nepra noted that the country could have generated electricity by using RLNG at a cost of Rs1.5 billion instead of using furnace oil costing Rs3.6 billion. The Nepra chairman said that for December the fuel price adjustment could be in the range of Rs1.30 to Rs1.60 per unit instead of Rs1.81 sought by the CPPA.

Farouqi asked as to which sector RLNG was diverted from the power sector in December?

“We have to look into the matter of diversion of power sector’s gas to other sector,” he said, adding, “We are the protector of electricity consumers, therefore, we are worried about the hike in power tariff.”

The CPPA had sought an increase of Rs1.8085 per unit under the fuel price adjustment mechanism for December 2020 for ex-Wapda distribution companies.

In its petition, the CPPA said that it had charged consumers a reference fuel tariff of Rs4.4602 per unit in December while the actual fuel cost turned out to be higher. Hence, it should be allowed to charge Rs1.8085 per unit additional cost from the consumers, the CPPA said.

According to data provided by the CPPA, the energy generation in December 2020 was recorded at 7,879.86 gigawatt-hours (GWh). The total cost of energy generated amounted to Rs37.666 billion.

Total electricity sold to distribution companies was 7,563.88 GWh for Rs47.416 billion. Total transmission losses during December were 4.01%.

As per data submitted by the CPPA, the share of hydropower generation in December fell to 22.70% from 39.98% in November. The share of coal-based power plants in the energy mix increased from 14.65% in November to 29.15% in December. The cost of coal-based electricity also decreased from Rs7.1045 per unit in November to Rs6.3412 per unit in December.

The power generated from furnace oil increased from 27.77GWh or 0.37% in November to 293.92 GWh or 3.73%. The cost of the electricity generated from RFO also increased from Rs11.7645 per unit in November to Rs12.2799 per unit in December.

The CPPA also demanded previous adjustment/supplemental charges of Rs10.478 billion or Rs1.3297 per unit in its petition.

Published in The Express Tribune, January 28^th, 2021.

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