The consumers are likely to enjoy a significant cut of Rs2.45 per unit in power prices following decline in global oil prices and efficient use of power plants.
National Electric Power Regulatory Authority (Nepra) is set to announce reduction in power rates for the month of November on account of fuel adjustment.
“The power rates were to be cut by Re0.70 per unit for the month of November but impact of fuel adjustment would be more than this due to dip in oil prices and efficient use of power plants,” Secretary Ministry of Water and Power Younis Daga on Thursday informed the Senate Standing Committee on Water and Power. Parliamentary panel was chaired by Senator Zahid Khan.
He said that the government had followed a policy of efficient use of power plants and saved Rs27 billion due to 250,000 metric tonnes less furnace oil during the month of November.
“We have saved $160 million in foreign exchange reserves due to less imports of furnace oil,” he said, adding that power production had remained the same despite less use of furnace oil.
“The impact of Rs8 billion is Re0.70 per unit which will be passed on to the consumers,” he maintained while talking to The Express Tribune. However, he refused to give exact impact of Rs27 billion in power price cost.
Younis Daga went on to say that per unit cost of electricity was Rs13.50 per unit and government was giving a subsidy of Rs2 per unit to the lifeline consumers, adding that power generated from furnace oil was very expensive and there was no gas available for power plants.
Therefore, he said, the country had only two options of generating power through hydel and coal resources.
He added that the government was focusing on hydel power projects. In the long run, he noted, Thar coal would be used for power generation.
Secretary Ministry of Water and Power also noted that Prime Minister Nawaz Sharif had directed to introduce new slab to provide relief to the consumers and tasked Sartaj Aziz to implement this plan.
He pointed out that PM Nawaz had taken up the matter in Cabinet Committee on Energy, adding that consumers using 300 to 700 units per month were adversely affected.
He further said that the government was working on a plan of introducing a new slab of 300 to 500 units to provide relief to middle income group.
Next month would be tough when hydel production would be zero due to annual desalination, he added.
Chairman Nepra said that a benefit of Rs6.9 billion had been passed on to the consumers in the last 10 months from January to October following fuel price adjustment, adding that consumers had relief of 48 paisa cut in power prices for the month of October.
While responding to a question about funding for Neelum-Jhelum Hydropower Project, additional secretary finance Azra Mujtaba said that foreign donors had no appetite for financing and therefore, local banks were the option to generate funds to bridge the gap.
Finance ministry would hold meeting to arrange financing for this project on December 16, he maintained.
Managing Director Neelum-Jhelum Hydropower Company General Zubair said that they were facing a financing gap of $475 million.
“Government has requested Exim Bank of China to provide $200 million additional funding to complete the project,” he said, adding that Rs3 billion on monthly basis was required to complete the project in time.
Senate body ordered an inquiry into cost escalation due to change in the project’s design. Its initial cost was Rs84 billion which had jumped up to Rs274 billion. He also noted that 68 per cent work on the project had been completed.
Published in The Express Tribune, December 12th, 2014.
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