The National Electric Power Regulatory Authority (NEPRA) on Tuesday reserved its decision on the Central Power Purchasing Agency’s (CPPA) plea seeking an increase, in the power tariff, of Rs. 4.75 per unit for the month of October.
The increase, if approved, will have an impact of around Rs. 60 billion, as expensive power was produced on imported furnace oil in the absence of required LNG supplies. The financial burden on consumers of ex-WAPDA distribution companies (Discos) will be reflected in the billing month of December. However, the consumers of K-Electric and lifeline consumers will be exempted from the surcharge.
The cost of the fuel used in power plants is a pass-through item and is paid for by consumers. As per the petition filed by the CPPA, 10% more electricity has been generated from furnace oil in October. The use of expensive furnace oil and rising global prices have resulted in generating expensive electricity, as per the CPPA briefing in the hearing.
NEPRA officials said that a previous adjustment of Rs. 5.2 billion had also been sought.
According to CPPA, violation of merit order resulted in a burden of over Rs. 1.77 billion and LNG shortage had caused a burden of over Rs. 1.69 billion.
NEPRA officials revealed that less electricity could have been generated from furnace oil had the LNG supply been in accordance with the demand. They added that 15% of electricity, instead of 25%, had been generated from coal. It was disclosed that a unit of the China Hub Power plant had been off-the-grid for the last six months.
Chairman NEPRA, Tauseef H. Farooqi, raised concerns over the use of inefficient power plants. He asked, “doesn’t the nation have the right to ask why cheap plants are not being operated”? He said that power plants around the world were in the open. He asked why did China Power Hub not have arrangements to avoid lightning. NEPRA summoned the power plant management in the next hearing to explain their position.
Vice-Chairman NEPRA, Rafiq Sheikh, observed that the entire burden of running expensive power plants was to be borne by domestic consumers. He raised questions about the NPCC’s failure to comply with the direction of the authority to report the dispatch of generation plants out of merit on daily basis. He said that consistent failure warranted legal processing against NPCC. NEPRA Sindh member said CPPA had failed to submit the segregation of financial impact into heads, including impact on account of the shortage of RLNG, system constraints, and underutilization of efficient power plants, against the merit order.
The NEPRA chairman said that the country witnessed growth due to the industrial package. He maintained that the International Monetary Fund and the World Bank had forecasted growth of only one percent. He said that due to the growth in electricity consumption, the industrial sector bounced back.
CPPA officials told the hearing that the price of 76 cents coal had reached 200 cents, adding that no power plant had been shut down due to shortage of coal.
The NEPRA chairman said that the current situation was very difficult, adding that, “we have to safeguard the consumers, and at the same time we have to allow the fuel cost to increase.” He stated that progress was being made to resolve the issue of LNG demand.
To a question, CPPA informed the authority that the government had paid Rs. 134 billion to IPPs.
After the hearing, the NEPRA reserved its decision. If the proposed increase gets NEPRA’s nod, the per-unit cost of electricity will be increased to Rs 4.75 to be charged in December bills for country-wide consumers, except the Karachi consumers.