NEPRA imposes Rs5.2bn additional burden with fuel cost adjustment increase

The National Electric Power Regulatory Authority (Nepra) has issued a notification regarding an additional fuel cost adjustment (FCA) of 40 paisa per unit for consumers of ex-Wapda distribution companies (Discos), with a net financial impact of Rs 5.2 billion.

This adjustment applies to electricity consumed in September and excludes Electric Vehicle Charging Stations (EVCS) and Lifeline consumers. Consumers under ex-Discos will see the fuel charges adjustment reflected in their November bills.

The Central Power Purchasing Agency (CPPA), on behalf of Discos, had initially requested a 55 paisa per unit additional FCA, aiming to raise Rs7 billion for electricity consumed in September.

They argued that consumers had been charged at a reference fuel cost of Rs7.07 per unit, but the actual cost turned out to be Rs7.62 per unit, justifying the additional 55 paisa per unit charge.

It is worth noting that this additional FCA comes despite over 77 percent of power electricity generation originating from cheaper domestic fuels and significant increases in annual base tariffs (26 pc) and quarterly tariff adjustments (18 pc).

In terms of power generation sources, hydropower contributed approximately 37.55 percent to the national grid in September, a slight decrease from August’s 37.6 percent. 

However, the absolute hydropower production in September (five billion units) was nearly 17 percent lower than in August (6 billion units). Hydropower does not incur fuel costs. Overall power supply in September was down by 16 percent compared to August, amounting to about 12.9 billion units.

Nuclear power held the second position with a 17 percent share in the national grid for September, up from 12.79 percent in August, contributing almost 2.3 billion units.

LNG-based power generation, at about 16 percent, claimed the third position, down from 17.2 percent in August, 19.67 percent in July, and 18.55 percent in June.

Local coal-based generation accounted for an 11.08 percent share in September, slightly higher than the 10.3 percent in August, while imported coal-based generation stood at 4.83 percent, up from 4.51 percent in August.

The total share of coal-based power generation amounted to 15.9 percent in September against 14.8 percent in August. In July this year, the cumulative coal-based generation (local and imported) stood at 14.69 percent compared to 17.75 percent in June.

Power supply from domestic gas continued its decline, contributing just a 7.54 percent share to the national grid in September compared to 7.60 percent in August, 7.61 percent in July, 8.54 percent in June, 10.35 percent in May, and 12 percent in April.