The National Electric Power Regulatory Authority (NEPRA) has reserved the decision to increase electricity prices under the Fuel Cost Adjustments (FCA) for December 2021.
It conducted a hearing of the petition by the Central Power Purchasing Agency (CPPA-G) to raise the per kWh price of electricity to Rs. 3.09 under ‘higher input cost of fuels’.
NEPRA Chairman, Tauseef H. Farooqui, chaired the hearing that was attended by its members and other stakeholders.
The CPPA requested the NEPRA to raise the monthly FCA by Rs. 3.12 per unit but the NEPRA had calculated and determined it to be Rs. 3.09 per unit.
The former argued that the reference per unit cost determined is Rs. 5.53 per unit while the generation cost has triggered a high of Rs. 8.65 per unit. Therefore, the regulator would allow an increase of Rs. 3.12 per unit.
As per the petition, 8.52 billion units of electricity were generated in December 2021 and the cost of power generation was Rs. 73.84 billion. The most expensive electricity was generated from furnace oil at Rs. 22.24 per unit while the production from LNG cost Rs. 17.80 per unit. The electricity generated from diesel was determined to be at Rs. 14.8 per unit.
Furthermore, the cost of generating electricity from coal was Rs. 13.31 per unit, and electricity was imported from Iran at Rs. 13.26 per unit.
The NEPRA officials stated during the hearing that the rising prices of Liquefied Natural Gas and imported coal are the main reasons for the rising production costs. They said that the power generation increased by 17 percent due to the already announced package for industrial consumers. It was also noted that industries had consumed 19 percent more electricity in December 2021. The officials added that the overall power consumption increased by 5.5 percent due to the winter discount package.
The briefing included details that LNG prices have increased in the global market and therefore the cost of production has also increased.
The Vice-Chairman of the NEPRA and member Sindh, Rafiq Ahmed Sheikh, expressed his concerns about the reduction in wind and solar generation. He asked the CPPA why the share of wind and solar is decreasing. “If 650 MW wind and solar projects were completed, then cheap electricity would have been generated,” he pointed out.
Both the sources had generated less than three percent of electricity when compared to capacity as the tariff for the 600 MW wind and solar power plants was Rs. 1.5 per unit, which would have been translated into savings of Rs. 14 per unit for the consumers.
The NEPRA was also informed that the shortage of LNG and the violation of merit orders have caused a loss of over Rs 2.6 billion for the consumers. Vice-Chairman Sheikh asked the CPPA officials if they have any plans for the shortage of RLNG and if the shortage of supplies and reliance on imported fuel can be expected to end soon.
Following the hearing, the NEPRA reserved the decision for the monthly fuel cost adjustments for December 2021. If the demanded increase of Rs. 3.09 per unit is allowed, consumers across Pakistan will be additionally burdened with Rs. 26.40 billion. Accordingly, the inflated bills will be charged to the consumers in the February 2022 bills. However, Lifeline consumers using under 50 units and consumers under the K-Electric system will remain unaffected.
The NEPRA had allowed the CPPA to charge electricity consumers another Rs. 4.30 per unit with the units they had consumed in November 2021. Its Chairman had clarified that if approved, the December 2021 FCA would have a net reduction of Rs. 1.21 per unit as compared to the November 2021 FCA.
