NEPRA not consulted on LNG terminal closure

Regulator likely to slash power tariff by Rs0.28 per unit for May on account of fuel adjustment

ISLAMABAD:

The National Electric Power Regulatory Authority (Nepra) on Tuesday said that government had not taken it into confidence while taking the decision to shut down the LNG terminal.

The regulator is likely to reduce power tariff by 28.66 paisa per unit for the month of May under Fuel Charges Adjustment (FCA).

Presiding over hearing on the petition of Central Power Purchasing Agency Guaranteed (CPPA-G), Nepra Chairman Tauseef H Farooqi said that the regulator was not taken into confidence regarding shutting down of LNG terminal and the use of alternative expensive fuel for the power generation during the dry-docking of Engro Floating Storage Re-Gasified Unit (FSRU).

The CPPA-G had requested Nepra to allow refund of overcharge tariff of 12.5 paisa per unit to the consumers of distribution companies for the month of May 2021 under FCA mechanism. However, Nepra noted that against the actual fuel charge component of Rs5.6734 per unit the reference fuel charge component was Rs5.9322 per unit. The fuel price variation for May was 25.88 paisa.

Similarly deviation from the economic merit order caused an extra burden of Rs354.29 million or 2.78 paisa per unit. The total decrease recommended was 28.66 paisa per unit and it will have an impact of Rs3.6 billion. However, this benefit will not be provided to lifeline consumers, agriculture consumers and those domestic consumers who use up to 300 units in a month. Nepra has reserved the judgment which will be announced later.

During the hearing Nepra officials said that in May instead of more efficient power plants inefficient power plants were operated for power generation. Similarly against the demand of 800mmcfd gas to the power plants 600mmcfd gas was provided, said Nepra officials. The high cost caused by the use of inefficient power plants and system weaknesses should not be transferred to the power consumers, the regulator noted.

The Nepra chairman also showed his annoyance over NTDC over the faults in transmission system and said that NTDC was sleeping when the government was installing power plants. “Why did the NTDC not bring the upgrade of transmission system to the government’s notice when they were installing new power plants?”

Although the regulator was not taken into confidence regarding the closure of LNG terminal, Nepra will try that the consumers are less affected by load-shedding. The Nepra chairman said that the regulator was not taken into confidence over the use of alternative fuel for power generation in case of closure of the terminal. The total energy generated was recorded at 13,009.51GWh, at Rs5.7009 per unit. The total cost of energy was Rs74.166 billion.

The CPPA-G in its petition said that since the reference fuel charges for May 2021 were estimated at Rs5.9322 per unit whereas the actual fuel charges were Rs5.8067 per unit, hence a reduction of 12.55 paisa per unit has been sought for May 2021. CPPA-G also sought a reduction of Rs23 million in supplemental charges.

Published in The Express Tribune, June 30^th, 2021.

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