NEPRA allows 85 paisa per unit raise in power tariff

Lifeline and KESC consumers exempted from the hike.

ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) has allowed power distribution companies (DISCOs) to raise their power tariff by 85 paisa per unit, on account of fuel adjustment for July 2012. The regulator allowed the increase during a public hearing conducted here on Tuesday, with Nepra Acting Chairman Ghayasuddin Ahmad in the chair.

Through the increase, consumers will pay Rs9 billion for the cost of fuel consumed by power producers during the month of July. Lifeline and KESC consumers have been exempted from the hike.

The Central Power Purchasing Agency (CPPA) had informed Ahmad during the hearing that the actual fuel cost of power had jumped to Rs7.29 per unit against the reference price of Rs6.43 per unit. Therefore, the CPPA pleaded, power firms should be allowed to raise their power tariff by 86 paisa per unit to recover the additional cost incurred. Thereafter, Nepra allowed the proposed price hike.

During the hearing, serious concerns were expressed by Nepra members over payments made to small power producers on unverified invoices for the supply of power.

Shaukat Ali Kundi, member from Khyber-Pakhtunkhwa, said that it was a matter of grave concern that the CPPA was getting an approval to raise the power tariff based on unverified invoices.

“The CPPA does not have complete documentation of its power purchases from producers, and is doing all this intentionally [sic],” Kundi said.

Furthermore, it came to light that transmission losses of power firms have risen to 3.7%, against the 2.50% benchmark set by the regulator. The increase has incurred a loss of Rs780 million, which will be shouldered either by the government, or passed on to consumers.

Nepra member from Punjab Khawja Muhammad Naeem said that millions of dollars in undue burden was being transferred on to consumers because of excessive line losses. He said that the Ministry of Water and Power will be approached and urged to take measures for an immediate reduction in the same. He further alleged that state-owned power generation companies had produced 3.27 billion units of electricity at cost an exorbitant cost of Rs15.43 per unit by using furnace oil of varying calorific value; compared to the cost of hydel power, which currently stands at 16 paisa per unit.

The CPPA Director General Hassan Bukhari countered arguing that small power producers were being paid dues on the basis of information, and confirmation of payments were made following receipt of invoices after every one and a half month. He said that several disputes had emerged between independent power producers and power purchasers, which had led to allegations being hurled in both directions.

Published in The Express Tribune, September 5^th, 2012.