NEPRA’s decisions: Power consumption gets cheaper by Rs1.86 per unit

Electricity consumers, however, would have to pay 76 paisa per unit as GIDC

Zafar Bhutta June 27, 2015
Nepra believes the cess will be collected by absorbing the impact of falling oil prices and, therefore, consumers will not be burdened.


The National Electric Power Regulatory Authority (Nepra) has cut electricity tariff by Rs1.86 per unit for the month of April under the fuel price adjustment mechanism.

At the same time, however, the regulator has denied a relief of 76 paisa per unit as it permitted power companies to recover arrears of Rs11 billion in installments from the consumers in the shape of gas infrastructure development cess (GIDC).

In an attempt to collect the cess, the regulator has made it clear that the reduction in power tariff for April will not apply to agriculture tube wells and domestic consumers using 300 units per month.

In a petition filed with Nepra, the Central Power Purchasing Agency (CPPA) had sought a tariff reduction of Rs2.62 per unit on account of lower fuel cost for the month of April.

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During a public hearing conducted here on Thursday, chaired by Tariq Sadozai, the regulator imposed GIDC at the rate of 76 paisa per unit on gas consumption by power producers, who would collect Rs11 billion in installments in coming months from the consumers.

However, Nepra provided the remaining relief of Rs1.86 per unit to the electricity consumers. The tariff cut will not apply to lifeline consumers using up to 50 units per month and consumers of K-Electric, which is a privatised company.

In the petition, the CPPA told the regulator that 7.17 billion units were sold to power distribution companies for Rs45.2 billion during April and transmission losses stood at 2.19%. Fuel consumption was estimated to cost Rs8.92 per unit whereas the actual cost was Rs6.30 per unit.

In the month, the share of hydroelectric power was 20.06%, furnace oil-based electricity 39.32%, gas-based power 26.7%, coal power 0.18%, high-speed diesel-based generation 5.06% and nuclear power 5.88%.

The electricity produced with the help of furnace oil cost Rs9.86 per unit, high-speed diesel cost Rs13.85 per unit, gas Rs5.18 per unit, coal Rs4.49 per unit and nuclear Rs1.18 per unit.

The recovery of Rs11 billion in GIDC arrears, following the passage of GIDC bill in parliament, will be made in future fuel price adjustments also. Nepra believes the cess will be collected by absorbing the impact of falling oil prices and, therefore, consumers will not be burdened.

Gas-fired plants

Following the levy of GIDC on gas supply to power plants, the tariff for gas-based plants will go up by Rs4.3 to Rs4.5 per unit.

Read: Bowing to govt pressure: Nepra approves Rs4 surcharge on power tariff

In a petition filed with Nepra against the GIDC Act 2015, Engro Powergen Qadirpur Limited pleaded that the demand for GIDC payment made by Sui Northern Gas Pipelines (SNGPL) covering the period 2013 to May 2015 could not be met.

The reason given was that the petitioner itself had never collected the cess from the National Transmission and Dispatch Company (NTDC), the sole purchaser of electricity produced by the petitioner.

It further pleaded that the cess could not be collected in view of the fact that Nepra had not revised the tariff to factor in the GIDC because of various restraining orders passed by the high courts.

On the other hand, power distribution companies were to recover the GIDC from the consumers of electricity, making the matter complicated and prompting the court to direct the power regulator to look into the matter.

The cess was imposed by the previous government of Pakistan Peoples Party (PPP) in a bid to raise funds for gas import projects like Iran-Pakistan gas pipeline and LNG imports. The government has so far collected Rs94 billion, but it could not be used as the levy was rejected by the Supreme Court.

The present government has succeeded in getting the GIDC bill passed from parliament to legalise the Rs94 billion collected so far and even recover arrears from the consumers.

The gas price was Rs488.23 per million British thermal units (mmbtu) whereas Rs100 per mmbtu was levied as GIDC on power producers, which would eventually be passed on to the power consumers.

Published in The Express Tribune, June 27th, 2015.

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