NEPRA reserves decision on tariff cut by Rs0.57

CPPA says 12.7b units of electricity were sold but consumption dropped 20%

ISLAMABAD:

The National Electric Power Regulatory Authority (NEPRA) on Thursday reserved its decision on the Central Power Purchasing Agency's (CPPA) request to reduce power tariffs by Rs0.57 per unit under the Fuel Charges Adjustment (FCA) for August 2024. If approved, this would follow a Rs0.37 per unit decrease applied in July 2024.

The hearing, chaired by NEPRA Chairman Waseem Mukhtar, was held at NEPRA's headquarters and focused on CPPA's proposal. CPPA, representing power distribution companies (DISCOs), sought permission to pass on the Rs0.57 reduction to consumers, though the adjustment would not apply to lifeline consumers, electric vehicle charging stations, or K-Electric (KE) customers.

Following a public hearing, NEPRA announced it would issue a final decision and notification after thoroughly reviewing the data provided by CPPA, with a formal announcement expected soon.

During the hearing, CPPA officials disclosed that a total of 12.75 billion units of electricity were sold in August. However, electricity consumption dropped by 20% compared to previous months, raising concerns within NEPRA. This decline was primarily attributed to high electricity costs, which have reduced demand from both industrial and agricultural sectors.

CPPA's data revealed that in August, 21% of electricity generation relied on imported coal, while 73% came from local coal sources. Electricity generation during the month ranged between a minimum of 11,981 megawatts and a peak of 23,200 megawatts.

NEPRA member Matar Niaz Rana expressed concern over the declining demand, linking it to rising electricity costs. NEPRA Chairman Waseem Mukhtar echoed these worries, particularly regarding the industrial sector, where high electricity prices are seen as a major factor contributing to the decline in power consumption.

NEPRA member Rafiq Sheikh highlighted that several industrial units had scaled down or ceased operations due to unaffordable electricity costs, further reducing overall electricity demand. Industry representatives confirmed that expensive electricity is forcing many to shut down operations, leading to reduced consumption across various sectors.

Maqsood Anwar, another NEPRA member, suggested that financial support for industries could help stabilise or even increase electricity demand. However, Rafiq Sheikh noted that as demand continues to decline, quarterly adjustments in electricity prices would rise, placing additional financial burdens on general consumers.

CPPA officials also disclosed that the Sahiwal Coal Power Plant has been operating at reduced capacity for the past three months. This underutilisation has resulted in significant financial losses, with the plant incurring costs of Rs5.30 billion in June, Rs4 billion in July, and Rs1.5 billion in August. The reduced capacity has worsened the financial strain on the overall power sector.

In addition to coal generation, power division officials reported that 13,000 MW of solar power had been imported over the past seven months, contributing to shifting demand patterns. However, the decline in industrial electricity demand remains a critical concern.

NEPRA has reserved its decision and will issue its final ruling after thoroughly reviewing the data. A formal notification regarding the FCA for August will also be issued in due course.