ISLAMABAD: The National Electric Power Regulatory Authority (NEPRA) has increased the electricity rates up to Rs2.5627 per unit under the head Fuel Charges Adjustment (FCA) for June 2024.
As per details, this hike will put an additional financial burden of Rs 33.45 billion on power consumers that would be recovered in electricity bills of August. However, with the imposition of 18% general sales tax (GST), the total burden on inflation-hit masses will be increased up to Rs 39 billion.
This adjustment on account of the monthly FCA for June 2024 is expected to cover the gap between the actual cost of power generation and what was previously charged. The rise in costs was driven by high prices of liquefied natural gas (LNG) and oil, coupled with lower electricity demand
The adjustment will apply to all consumer categories except electric vehicle charging stations (EVCS) and lifeline consumers.
DISCOs had sought permission to charge an additional Rs2.63 per unit claiming that the reference fuel cost for June was set at Rs 7.14 per unit, but the actual fuel cost turned out to be Rs9.77 per unit.
During a public hearing on July 31, the CEO of Central Power Purchasing Agency (CPPA), while presenting the case before the NEPRA, submitted that there was slightly lower generation from Hydro and local coal as compared to generation assumed in reference tariff.
He also explained that the Neelum Jhelum Hydropower Project (NJHP) could not be operated due to the forced outage and consequently no payments were made to NJHP.
However, certain fuels which were not a significant part of the reference mix such as RLNG were operated because of system requirements and contractual obligations. The actual generation remained 10 percent lower than anticipated.
A representative of NTDC/NPCC submitted that on a year-on-year basis the generation has decreased by 2 percent. It was further submitted that the peak demand during the month was 22,971 MW while the lowest demand achieved during the month was 10,092 MW.
CPPA said that in June, 13,459 gigawatt-hours (GWh) of electricity were generated at a fuel cost of Rs119.7 billion (Rs8.89 per unit), with 13,071 GWh delivered to distribution companies at Rs127.7 billion (Rs9.77 per unit).
Consumption dropped 1.9 percent from June 2023, while the Rs2.63 per unit fuel cost adjustment (FCA) for June 2024 was 40 percent higher than last year’s Rs1.88/unit.
Hydropower led the supply with 35 percent, followed by LNG at 18 percent, nuclear at 14.85 percent, local coal at 11 percent, and local gas at 8.66 percent. Imported coal contributed 4.74 percent. The cost of LNG-based generation rose to Rs26.32 per unit, while domestic gas increased slightly to Rs13.93 per unit. Local coal costs fell to Rs11.1 per unit, and imported coal dropped to Rs15.5 per unit.
Renewable sources such as wind, bagasse, and solar contributed 5.14% of the grid’s supply, with bagasse generation costs remaining steady at Rs6 per unit.
Meanwhile, the Minister for Power Division Sardar Awais Ahmad Khan Leghari on Thursday announced the formation of a Task Force that would also review the agreements with Independent Power Producers (IPPs) and find out possibilities of shutting down old power plants to reduce the rate of capacity payments.
At present, the consumers are paying Rs 2.2 trillion to Rs 2.8 trillion every year on account of capacity payments. The minister said that the power sector had a key role in the daily life of the people and even the economy.
He said that on the directives of Prime Minister Shehbaz Sharif, a Task Force on Implementation of Structural Reforms in the Power Sector had been constituted to review all the aspects for improvement in the power sector.
Talking to media persons along with Co-Chairman of the Task Force Muhammad Ali, the minister said that the power sector was the backbone of any economy and the government was committed to bringing reforms to enhance its efficiency.
He informed that the Task Force in its first meeting had considered 20 to 22 key points to bring reforms in the power sector.
Speaking on the occasion, Muhammad Ali said that the Task Force would also look into the issues of IPPs besides taking steps to bring down the generation cost of the electricity.
He said that all departments had representation in this and it was looking into IPPs issue to cut generation cost. He said that the government was also looking into reducing the burden on the consumers.
