Power consumers likely to face Rs5/unit tariff hike in FY2024-25

Central Power Purchasing Agency, on behalf of Discos, submits the projected power purchase for the financial year 2024-25.

ISLAMABAD: Electricity consumers may face additional financial hardships as the base tariff of electricity is projected to increase to Rs 5 per unit for the Financial Year (FY) 2024-25.

As per details, Central Power Purchasing Agency (CPPA), on behalf of power distribution companies (DISCOs) has submitted the projected power purchase for the Financial Year (FY) 2024-25. And, the total power purchase price for the next fiscal has been projected to be up to Rs 358 billion.

CPPA, in its petition, submitted with National Electric Power Regulatory Authority (NEPRA) presented Projected Power Purchase Price report for the FY 2024-25, under seven scenarios for consideration of the Authority NEPRA), in order to determine the consumer-end tariff for FY 2024-25.

The scenarios are based on various level of demand growth (3pc to 5pc), exchange rate (Pak rupee value at 275 and 300) and hydrology of normal and dry season.

The CPPA projection suggested that electricity consumers will bear 2.40 percent of the US inflation, which is proposed to be incorporated into the tariff, 12.20 percent of domestic inflation, interest charge of 21.37 percent and 5.31 percent, on electricity purchases, and market operator fee of Rs 3.48 per unit.

Similarly, fuel cost of Rs 8.61 per unit to 9.34 per unit has been proposed under various scenarios. Capacity charges from 15.49 per unit to Rs 17.42 per unit are also projected for 2024-25.

It is worth to mention here that during the ongoing fiscal year the capacity payments was 71 percent of the power purchase price (PPP), whereas energy cost was around 29% of the total projected PPP.

The capacity charges for 2023-24 was Rs.16.22 per unit, whereas energy charges are Rs.6.73 per unit.

The total Power Purchase Price under seven scenarios has been projected from Rs 25.03 per unit to Rs 27.11 per unit for the next fiscal year. Notably, the PPP for the ongoing FY 2023-24 is Rs 22.95 per unit.

The capacity charges works out as around 64% of the total projected PPP of DISCOs, whereas energy cost is around 34 % of the total projected PPP.

On account of variable O&M cost the CPPA has projected Rs 0.48 per unit and Rs 0.50 per unit on account of seven different scenarios.

The increase in PPP has been projected from Rs 2.07 per unit Rs 4.16 per unit, under various scenarios.

Besides, the PPP, the base tariff also includes distribution margin DISCOs, transmission and distribution losses.

The distribution margins of DISCOs for the ongoing Fiscal year is Rs 3.10 per unit which is also likely to go up by 15 to 20 percent. The current base price of electricity is around Rs 30 per unit.

To ensure a fair and informed decision, NEPRA has scheduled a hearing for May 23, 2024.

It is worth mentioning that if approved, consumers of DISCOs could face a staggering additional financial strain of Rs 337 billion to Rs 358 billion in the upcoming fiscal year (2024-25).

Ahmad Ahmadani
Ahmad Ahmadani
The author is a an investigative journalist at Profit. He can be reached at [email protected].

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Must Read

A carbon tax on petrol would appease the IMF, and possibly...

A carbon tax on petrol makes good economic sense for the federation. It does not, however, fall in line with the Pakistani government’s Santa Claus mentality. Which argument will prevail?