NEPRA notifies Rs3.99 tariff hike

Govt under pressure to increase HSD, petrol prices

Zafar Bhutta June 14, 2022


The National Electric Power Regulatory Authority (Nepra) on Monday notified an increase in power tariff by Rs3.99 per unit on account of fuel cost adjustment (FCA) for April 2022.

The decision will result in putting an extra burden of Rs51 billion on power consumers. The increase, however, would not apply to K-Electric consumers and lifeline users.

Earlier, Nepra had held a public hearing to consider a proposal to raise the tariff by Rs4.5 per unit.

The Central Power Purchasing Agency (CPPA-G), while applying for the April fuel price adjustment, stated that 12.55 billion units of electricity were generated last month.

During the hearing, the authority also observed that energy from costlier RFO-based power plants was generated to the tune of over Rs44,094 million during the month of April 2022.

According to data submitted by CPPA-G, XWDISCOs purchased 9.383 GWh from Captive Power Plants (CPPs) in April 2022.

It is interesting to note that Captive Power Plants (CPPs) had lower efficiency rates and the previous PTI-led government had been providing expensive imported gas at cheaper rates to these captive power plants. Meanwhile, the most efficient power plants were not run on cheaper fuel.

The power regulator noted that the second most efficient RLNG power plants in Pakistan are the Orient, Saif, Sapphire and Halmore power plants. The efficiency of these power plants is above 51%. The utilization factor of Orient, Saif, Sapphire and Halmore on RLNG fuel was 61%, 42%, 43% and 64% respectively.

Similarly, the utilization factor of Saif Power and Sapphire Electric on HSD was around 16% and 15%.
Operation of these power plants on part load resulted in part-load adjustment charges claim of more than Rs.422 million. Full utilization of these power plants was also necessary to minimize the load shedding through the generation of electricity by cheaper resources and avoid the part-load charges of Rs.422 million.

During the hearing, the National Power Control Centre (NPCC) - the system operator (SO) and an arm of the National Transmission and Despatch Company (NTDC), explained the operation of power plants on RFO.

However, the power regulator observed that an in-house analysis has also been carried out, to work out the financial impact due to deviation from energy merit order (EMO) based on the information submitted by NPCC.

As per the in-house analysis, workings carried out, the net amount deductible, on a provisional basis, from the overall claim due to deviation from EMO is Rs580 million (Rs578 million financial impact due to System constraints and Rs2 million due to underutilization of efficient power plants).

The regulator decided to deduct this amount provisionally in the instant FCA until NPCC/ NTDC and CPPA-G provide the required details along with complete justification in this regard.

During the hearing, CPPA-G and NPCC also agreed to revise the EMO list that is posted on their website to exclude the RFO, gas and RLNG power plants which are not supplying energy to CPPA-G due to a lack of availability of fuel.


Oil Prices

The incumbent coalition government will also be facing another challenge of increasing prices of high-speed diesel and petrol for the upcoming fortnight.

According to sources, the oil prices continue rising which would be putting more burden either on the government or the people.

At present, the government will have to increase the price of high-speed diesel (HSD) by Rs52.99 per litre during the next fortnight. If it maintains the current price, it will have to pay price differential claims (PDC) or subsidies to the consumers.

The price could jump up to Rs257.14 per litre from Rs204.15 per litre in case government decides to remove the entire subsidy on diesel.

Diesel is mainly used in the transport and agriculture sectors. Therefore, any further increase in its price will result in a higher inflationary impact on the people.

The government will also have to increase the price of petrol by Rs18.01 per litre which could result in a hike in price to Rs227.87 per litre from Rs209.86 per litre.

In the case of maintaining prices, the government will have to bear a subsidy of Rs18.01 per litre.
The rupee depreciation against the dollar had resulted in the increase in price up to 0.79 per cent to Rs1.59.

The present government is already facing criticism due to making a massive increase in oil prices by Rs60 per litre after it came into power.

Therefore, it will be a big challenge for the government to make further increases in the prices of petroleum products.


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