Oil price impact: KESC tariff cut by 44 paisa per unit

Cost of furnace oil for the company comes down.

ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) has approved a reduction of 44 paisa per unit in the tariff of Karachi Electric Supply Company (KESC) on account of fuel price adjustment for July and August 2012.

For July, the tariff has been slashed by 7 paisa and for August the tariff comes down by 37 paisa.

In a petition filed with Nepra, the KESC said it sold 1.508 billion units of electricity to consumers in July this year, with a reduction of Rs105.006 million in fuel cost and asked the regulator to pass on the impact to the consumers.

According to the KESC, the actual decrease in fuel cost for the electricity produced by the company stood at Rs162.997 million, but it paid an additional cost of Rs57.991 million for power received from external sources. Thus, the reduction of 6.962 paisa in per unit fuel cost should be passed on to the consumers for the month of July, it said.

The KESC pointed out that in July the cost of furnace oil went down from Rs67,000 to Rs61,000 per ton and the cost of gas fell from Rs560 per million British thermal unit (mmbtu) to Rs507 per mmbtu following a cut in the Gas Infrastructure Development Cess.

Though the total impact of decline in fuel cost was 10 paisa per unit, the company had to operate its plants on furnace oil due to gas outages. Therefore, the impact came down to seven paisa per unit, the KESC argued.

In August, the KESC sold 1.407 billion units of electricity to the consumers, with the fuel cost declining by Rs517.615 million. The impact of reduced fuel cost on the company’s own power generation was Rs254.679 million and the cost of power purchased from external sources came down by Rs262.935 million.

It asked Nepra to pass on the reduction of 36.774 paisa per unit in power cost to the consumers for the month of August.

In the month, the cost of furnace oil dropped from Rs67,000 to Rs65,000 per ton. The company saw the possibility of further decline in power tariff in September as well because of falling furnace oil prices.

Published in The Express Tribune, October 18^th, 2012.