NEPRA indicates another tariff hike of Rs1.9

DISCOs’ consumers will pay Rs22.6b; KE tariff will also rise by Rs1.45 per unit

ISLAMABAD:

The National Electric Power Regulatory Authority (Nepra) indicated on Wednesday that electricity tariff would be increased by another Rs1.90 per unit under fuel cost adjustment (FCA) for May 2023, which would put a burden of Rs22.6 billion on consumers of all distribution companies (DISCOs).

Separately for K-Electric (KE), Nepra indicated a tariff hike of Rs1.45 per unit under the FCA for May. With this hike, KE consumers will pay a total of Rs2.6 billion.

A day ago, the regulator had notified an increase of Rs1.25 per unit in power tariff of DISCOs as third-quarter adjustment for financial year 2022-23, putting an overall burden of Rs46.5 billion on consumers.

According to a statement issued by Nepra on Wednesday, a public hearing was conducted on a petition filed on behalf of ex-Wapda DISCOs. The Central Power Purchasing Agency-Guarantee (CPPA-G) requested an FCA of Rs2.05 per kilowatt-hour (kWh) for May 2023.

Nepra stated that the net FCA for May 2023, as per its preliminary calculation, was Rs1.90 per kWh, which would have an impact of Rs22.6 billion. It will make a decision after due diligence and considering the comments of all stakeholders.

It was revealed during the hearing that the Sahiwal coal-fired power plant had imported 200,000 tons of coal, costing Rs85,000 per ton, which was left in the storage for several months.

The government’s electricity procurement agency was reluctant to receive the electricity generated with that expensive coal. Instead, it was accepting the supply of electricity produced with coal having a relatively cheaper cost of Rs45,000 per ton.

The relevant parties were working on a formula to calculate the weighted average cost of coal for power generation.

Meanwhile, disagreement arose between Nepra and the National Transmission and Despatch Company (NTDC) over the deduction of Rs38 billion due to system constraints.

NTDC officials claimed that they had faced electricity theft along two transmission lines in the south, resulting in a loss of Rs36 billion. Nepra has deducted the amount 30 times since September 2019.

The transmission company officials requested the regulator to allow the recovery of another Rs1.6 billion from consumers, but Nepra was reluctant.

NTDC officials pointed out that if the fresh demand of Rs1.6 billion was added, the total would reach Rs38 billion. They claimed that Nepra did not have the legal authority to deduct the amount.

Responding to that, Nepra Chairman Tauseef H Farooqi suggested that NTDC should challenge the matter in court, adding that the regulator’s role was to safeguard the interest of consumers.

At the hearing, an intervener mentioned that Nepra was not fulfilling its role as it had allowed the government to increase power tariff several times.

It was noted that the government had raised tariff by over Rs11 per unit while Nepra was planning to give the go-ahead for more hikes, which would further burden the consumers.

Clarifying the regulator’s position, the Nepra chairman pointed out that the government had already paid Rs1,000 billion in subsidies last year and if Nepra did not increase the tariff, the state would have to bear more subsidy costs.

He also mentioned factors such as the rupee depreciation against the dollar, which contributed to the hike in electricity prices.

Nepra also held a public hearing on the FCA request of KE for May 2023. The company requested an FCA of Rs1.495 per kWh while the net FCA, according to Nepra’s preliminary calculation, came in at Rs1.45 per kWh, with an impact of approximately Rs2.6 billion.

The regulator will make a decision after careful consideration of all stakeholders’ comments.

Published in The Express Tribune, July 6^th, 2023.

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