Cabinet approves Rs52b FCAs recovery

Govt seeks policy guidelines from NEPRA to implement them

ISLAMABAD:

The government has sought policy guidelines from the power regulator for transferring the burden of a staggering Rs52 billion to the consumers on account of fuel charges adjustments (FCAs) for the months of June and July, 2022.

The National Power Regulatory Authority (Nepra) would calculate this amount under the period of eight months starting from the next month to October 23, 2023 in accordance with the recovery rates mentioned for XWDISCOs and K-Electric.

Moreover, the government also requested Nepra to issue policy guidelines under Section 31 of the Regulation, Generation, Transmission, and Distribution of Electric Power Act 1997 for the recovery of FCAs applicable to the consumers for the months of August and September 2022.

The federal cabinet, through circulation, has already approved the recovery of Rs52 billion on account of the two FCAs.

Nepra had determined FCAs of Rs9.8972 per unit and Rs4.3435 per unit for the months of June and July 2022, respectively.

The amount of FCAs for both the months was supposed to be charged in the billing months of August and September 2022, respectively, for XWDISCOs.

For the consumers of K-Electric, the regulator had determined an increase of Rs9.8972 per unit on account of FCA to be charged in the August 2022 billing cycle.

Similarly, the K-Electric tariff was increased by Rs8.0909 per unit on account of FCA for June 2022 -- that was supposed to be charged in September 2022.

As the July FCA was negative Rs4.1171 per unit, the consumers were supposed to pay only an additional Rs3.9738 per unit instead of Rs8.0909 per unit hike determined by Nepra on account of the June FCA.

The rebasing of uniform tariff determined by Nepra and recommended by it as the "final tariff' for publication in the official gazette was notified by the federal government to not burden the consumers disproportionately in a sequence of Rs3.5 per unit in July 2022 and Rs3.5 per unit in August 2022.

Consumers were hit by Rs9.8972 per unit of the FCA in addition to Rs7 per unit of rebasing simultaneously in the August billing.

This is an average increase of Rs16.90 per unit over and above the July rates.

The adjustments in tariff significantly increased the electricity bills for the months of August and September 2022.

Moreover, the extensive floods because of the abnormally heavy monsoon rains also affected consumers across the country.

Under this scenario, Prime Minister Shehbaz Sharif decided to recover  the XWDISCOs and K-Electric FCAs applicable to consumers in August and September 2022.

Now, after succumbing to the pressure from the International Monetary Fund (IMF), the government has finally allowed the Power Division to recover the amount of FCAs from the consumers.

Following the cabinet’s approval, the burden of Rs52 billion on account of FCAs would be transferred to the power consumers.

To extend the flood relief to a limited class of domestic consumers, the federal government in giving effect to its economic and social policy objectives, is issuing guidelines to make adjustments on account of the variation of fuel charges in the approved tariff of XWDISCOs and K-Electric to the extent of recovery as follows: Non-ToU (time-of-use) domestic (protected) consumers having 200 units of consumption would only pay Rs3.8972 per unit FCA in the August 2022 billing month. The remaining FCA of Rs6 per unit (from the total of Rs9.8972 per unit) would be recovered subsequently.

Non-ToU domestic (protected) consumers having 300 units of consumption and private agricultural consumers would not pay any FCA in the August 2022 billing month.

A sum of Rs9.8972 per unit FCA would be recovered subsequently.

Non-ToU domestic consumers having consumed 300 units during the month of July 2022 would not pay any FCA in the September 2022 billing month.

An amount of Rs4.343 5 per unit FCA  would be recovered subsequently.

Non-ToU domestic consumers of K-Electric having 300 units of consumption during the month of July 2022 would not pay any FCA in the September 2022 billing month.

A total of Rs3.9738 per unit FCA (after passing on the negative FCA of 4.l 171 per unit for the month of July 2022 to consumers having a consumption of 300 units) would be recovered subsequently.

The policy guidelines as approved by the federal government for recovery of FCAs applicable to consumers for the months of August and September 2022, under Section 31 of the Regulation, Generation, Transmission and Distribution of Electric Power Act, 1997, has been conveyed to Nepra for its consideration.

The federal government intended to implement the deferred FCA recovery with effect from March 1, 2023.

It has requested that a hearing opportunity be provided for detailed submissions including a session with the technical professional team of the authority prior to the hearing.

Nepra will conduct a public hearing on March 2, 2023.