ISLAMABAD: The National Electric Power Regulatory Authority (NEPRA) on Thursday reserved its decision on the Central Power Purchasing Agency’s (CPPA) request to reduce power tariffs by Rs 0.57 per unit under the Fuel Charges Adjustment (FCA) for August 2024.
This reduction, if approved, would follow a Rs 0.37 per unit decrease applied in July 2024.
The hearing, chaired by NEPRA Chairman Waseem Mukhtar, took place at NEPRA’s headquarters and delved into CPPA’s proposal for the reduction.
CPPA, representing power distribution companies (DISCOs), submitted a request to NEPRA seeking permission to pass on the Rs 0.57 reduction to consumers. This adjustment, however, would not apply to lifeline consumers, electric vehicle charging stations, and K-Electric customers.
NEPRA has completed the public hearing and announced that it will issue a final decision and notification after a detailed examination of the data provided by CPPA. A formal announcement is expected soon, subject to further scrutiny.
During the hearing, CPPA officials revealed that a total of 12.75 billion units of electricity were sold in August. However, there was a significant 20 percent drop in electricity consumption compared to previous months, raising concerns within NEPRA. This decline was largely attributed to the high cost of electricity, which has led to a reduction in demand from both the industrial and agricultural sectors.
CPPA’s data showed that in August, 21 percent of electricity generation relied on imported coal, while 73% was generated from local coal sources. The electricity generated during this period fluctuated between a minimum of 11,981 megawatts and a peak of 23,200 megawatts.
NEPRA member Matahar Niaz Rana expressed his concern over the declining demand, linking it to the rising cost of electricity.
NEPRA Chairman Waseem Mukhtar echoed these concerns, particularly in regard to the industrial sector’s struggle with high electricity prices, which is seen as a contributing factor to the decline in power consumption.
NEPRA member Rafiq Sheikh highlighted that several industrial units had scaled down or ceased operations due to unaffordable electricity costs, which in turn had further reduced the overall electricity demand. According to industry representatives, expensive electricity is forcing them to shut down operations, leading to reduced consumption across various sectors.
Maqsood Anwar, another NEPRA member, suggested that if industries received financial support, electricity demand might stabilize or even increase.
Rafiq Sheikh added that as demand for electricity continues to decline, quarterly adjustments in electricity prices would rise, placing additional financial burdens on general consumers.
CPPA officials further disclosed that the Sahiwal Coal Power Plant had been operating at reduced capacity for the past three months. This reduced capacity has resulted in significant financial losses, with the plant incurring costs of Rs 5.30 billion in June, Rs 4 billion in July, and Rs 1.5 billion in August. The underutilization of the plant has exacerbated the financial strain on the power sector as a whole.
In addition to coal generation, officials from the power division reported that 13,000 MW of solar power had been imported in the past seven months, contributing to shifting demand patterns. However, the decline in industrial electricity demand remains a critical concern.
NEPRA has reserved its decision following the completion of the hearing and will issue its final ruling after conducting a thorough review of the data. The authority will also issue a formal notification regarding the FCA for August in due course.
It is pertinent to mention that the CPPA’s proposal to refund Rs 0.57 per unit to consumers offers a potential financial reprieve amidst rising energy costs. However, the broader issues of declining electricity demand, particularly in the industrial sector, remain a significant challenge for the power sector. NEPRA and other stakeholders are actively working to address these concerns to stabilize the sector and mitigate the financial impact on consumers.
