National Electric and Power Regulatory Authority (NEPRA) has increased the power tariff by Rs 1.25/unit on account of fuel adjustment costs for May 2018. The reason behind the hike in energy prices is due to increased imports of furnace oil (which is expensive) for power plants instead of LNG due to the Power Division’s delay in supplying LNG-related demand data to the Petroleum Division.
The decision came in the wake of the Central Power Purchasing Agency-Guarantee’s (CPPA-G) petition to increase the rates by Rs 1.3215 per unit. As per the CPPA-G, the actual cost of production is recorded to be Rs 6.6123 per unit, keeping in mind fuel prices at Rs 5.2908 per unit for May.
Low global crude oil rates ensured that Pakistani citizens enjoyed lower tariffs on power despite there being an increase of Rs 2.3 per unit in the previous government’s tenure.
LNG is in high demand these days, given how cheap it is as a source of power production, second only to domestic natural gas. However, the lack of data regarding the total LNG demand of power stations has led to fewer imports of LNG at the Port Qasim terminals. Reportedly, one of the terminals has imported only half of the expected LNG, which has allowed the oil lobby to charge high prices for furnace oil.
An additional Rs 15.7 billion would be charged from the consumers for the month of May on account of fuel-cost adjustment.
The efficiency of furnace oil-based plants is recorded to be 28% while that of gas-based plants is 50%. In May, energy produced by LNG-based plants (23.85%) was charged at Rs 9.10 while that produced from furnace oil powered plants (19.3) cost Rs 12.47.
A member from NEPRA, Himayataullah Khan talked about the supply of gas to Independent Power Producers (IPP) saying:
IPPs can produce more electricity if they are provided gas; consumers will face only an increase of Rs0.30 to Rs0.35 per unit in tariff if these plants are given the gas.
Reports state that up to 11,896.5 giga-watt hours (GWh) out of 12,117.67 GWh in May, was sent to power distribution companies. They faced a cumulative distribution loss of Rs 0.1205 per unit. The energy contributed by hydroelectric, wind and solar power plants stood at 18.3%, 2.38% and 0.52% respectively.