NEPRA approves electricity tariff hike by Rs 4.57/unit

The National Electric Power Regulatory Authority (NEPRA) announced an increase in electricity tariffs for distribution companies (Discos) by Rs 4.57 per unit for December 2023. 

This adjustment, part of the monthly Fuel Charges Adjustment (FCA) mechanism, reflects the soaring fuel costs that have impacted the power sector.

Following requests from power distribution companies for a tariff increase by Rs 5.6194 per unit to compensate for the elevated fuel charges incurred in December 2023, NEPRA, after a public hearing on January 31, approved a slightly less increase.

This rate adjustment directly responds to an application submitted by the Central Power Purchasing Agency (CPPA) on behalf of the Discos. 

The CPPA highlighted a considerable gap between the projected fuel cost, set at Rs 5.403 per unit, and the actual cost, which escalated to Rs 11.022 per unit in December. 

The total electricity produced with various fuels during this time amounted to 97,726 GWh, with an average cost of Rs 10.1341 per unit, ending in a total energy expenditure of Rs 78,296 million. 

The increase in fuel costs, driven by global market dynamics and local supply and demand challenges, has necessitated tariff adjustments within the power sector.

The FCA mechanism is designed to accurately reflect the genuine cost of electricity generation and ensure the sector’s financial stability by allowing companies to recoup the expenditures associated with power production.

The rise in tariffs highlights the energy sector’s broader challenges, including reliance on costly imported fuels.