Power tariff hike of Rs4.75 per unit likely

NEPRA reserves decision on fuel cost adjustment for Oct 2021

ISLAMABAD:

The National Electric Power Regulatory Authority (Nepra) is likely to allow tariff increase of up to Rs4.75 per unit to power distribution companies on account of fuel cost adjustment (FCA) for October 2021.

At the public hearing of a petition filed by the Central Power Purchasing Agency-Guarantee (CPPA-G) for monthly FCA, headed by Nepra Chairman Tauseef H Farooqi, the regulator pointed out that it was worried about the increase in electricity tariff.

In the petition submitted on behalf of distribution companies, the CPPA-G said that the reference fuel charge for consumers was set at Rs5.1733 per unit while the actual fuel cost came in at Rs9.9261 per unit. Therefore, the CPPA-G should be allowed to pass the increase of Rs4.7528 per unit on to consumers.

Owing to decrease in hydroelectric, wind, bagasse and solar power generation, power plants used expensive fuel such as high-speed diesel, furnace oil and liquefied natural gas (LNG) in October, which pushed up generation cost to almost Rs10 per unit.

In September 2021, the cost of electricity generation stood at Rs7.6816 per unit.

The regulator was told that excessive use of furnace oil was one of the reasons behind the expensive electricity while high-speed diesel-based generation increased from 2.34 gigawatt-hours (GWh) in September to 57.10 GWh in October.

The electricity generated with the help of furnace oil increased to 1,228.66 GWh in October from 997.44 GWh in September, costing Rs21.2273 per unit. Power producers used furnace oil worth Rs26 billion in October.

The cost of diesel-fired electricity was even more expensive at Rs25.2250 per unit.

When Nepra asked why furnace oil was used excessively, CPPA-G officials responded that some plants had technical problems, therefore, the gap was bridged with the consumption of furnace oil.

“Expensive fuel consumption is increasing the burden on consumers,” Nepra Vice Chairman Rafiq Sheikh remarked and asked how could the situation be improved?

“We have been asking to implement cheap solar projects,” Nepra chairman stressed, adding “we also gave a tariff of Rs3.5 per unit for 12 solar projects but these projects were not working.”

CPPA-G also sought previous adjustment of Rs5.2 billion. The hearing was told that the violation of merit order resulted in a burden of over Rs1.77 billion while LNG shortage cost more than Rs1.69 billion.

It was noted that if LNG supply had been according to demand, less electricity could have been generated from furnace oil.

About 15% of electricity was generated from coal compared to 25% earlier as a unit of China Hub Power had been closed for six months, officials said.

Nepra chairman pointed out that power plants all over the world were set up in open fields and asked didn’t China Hub Power have any arrangement to avoid lightning?

The regulator summoned the power plant management in the next hearing.

Nepra officials said that demand for electricity increased around 18% due to the industrial package.

The entire burden of running expensive power plants to meet rising demand fell on domestic consumers. Coal price also increased but no power plant was shut down due to coal shortage, CPPA-G officials said.

When asked how much IPPs had been paid in recent days, CPPA-G officials said that IPPs had been given Rs134 billion.

Nepra chairman remarked that the country would have to bear the consequences of past mistakes. “We have resorted to fuel imports instead of producing cheap electricity.”

As per CPPA-G data, a total of 11,296.23 GWh of energy was generated in October at a cost of Rs105.060 billion. The per-unit cost of energy came in at Rs9.3004 per unit.

Distribution companies were delivered a net 10,982.86 GWh of electricity at a cost of Rs109.017 billion, or Rs9.9261 per unit.

Hydel power generation stood at 2,627.25 GWh in October against production of 5,085 GWh in September. The share of hydroelectric power in total electricity generation was calculated at 23.26%.

The share of coal-based electricity decreased from 2,392 GWh in September to 1,885.78 GWh in October. It cost Rs11.3666 per unit.

Electricity generation by gas-based plants fell to 1,092.75 GWh in October from 1,248.28 GWh in September, costing Rs7.9795 per unit. Re-gasified LNG contributed 2,703 GWh against 2,651 GWh in September at a cost of Rs16.7482 per unit.

Nepra reserved its decision which it will announce after reviewing the statistics.

Published in The Express Tribune, December 1^st, 2021.

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