ISLAMABAD: National Electric Power Regulatory Authority (Nepra) on Wednesday indicated an increase of upto Rs 1.60 per unit in tariffs of power Distribution Companies for the month of December 2020 under monthly fuel price adjustment mechanism, amid a heated debate within the Authority on use of expensive fuel, which will overburden the consumers.
The increase which will be reflected in the bills of February 2021, is in addition to already approved Rs 1.95 per unit increase in base tariff of Discos to be recovered across the board.
The Nepra Authority comprising Chairman, Tauseef. H. Farooqi, Vice Chairman/Member Punjab, Saif Ullah Chattha, Member Sindh, Rafique Ahmad Shaikh and Member Balochistan, Rehmatullah Baloch, held a public hearing, and announced that the final decision of the Authority will be made public in a couple of weeks, after going through available documents and claims of petitioner and Nepra’s own technical team. CPPA-G sought an increase of Rs 1.81 per unit in the tariff to recover Rs 13.679 billion from consumers.
“We are not in a position to give exact number today as the regulator has to account for commercial impact of power sector dedicated gas to other sectors but the increase will be in the range of Rs 1.30 to Rs 1.60 per unit,” said, Chairman Nepra.
One commentator highlighted the consumers’ inability to bear additional burden of an increase in electricity tariff, maintaining that on the one hand the regulator claims that it is custodian of consumers and on the other it is putting “unbearable” burden on them.
The Chairman Nepra stated that it is a “very difficult” decision for the regulator to overburden the consumers, but the regulator has no other choice as circular debt has already touched Rs 2.4 trillion, raising the question whether the country is able to absorb such a huge burden.
“Yes, we are custodians of consumers’ rights but what can we do if our contracts are dollar-based and we have an obligation. Pakistan comes first. We have also to keep in mind that circular debt has reached Rs 2.4 trillion. If we do not pass the FCA to consumers, what other mechanism is there to deal with it. Has the country the capacity to bear such a huge burden,” Farooqi noted.
The Chairman Nepra further pointed out that power sector’s gas was diverted to domestic consumers to protect them from severe cold due to which expensive fuel was consumed to generate electricity as per the policy.
Nepra’s technical team noted that the financial impact of Economic Merit Order’s (EMO’s) violation calculated on hourly generation data of November 2020 was Rs 2.180 billion of which Rs 1.515 billion was related to shortage of RLNG and Rs 665 million on account of underutilization of power plants which generate cheap electricity.
A debate was also witnessed between Chairman NEPRA and Member Sindh, Rafique Ahmad Shaikh on the cost of RLNG vis-a-vis furnace oil and coal. The Chairman NEPRA opined that the figures indicate that non-availability of RLNG was a blessing in disguise. However, Rafique Shaikh responded that this is not the case, adding that if RLNG would have been consumed in generation, an additional amount of Rs 3.6 billion spent on furnace oil based generation could be saved.
“We have to look into the factors which are not affecting the consumers rather than those which are affecting them,” Shaikh argued.
The Chairman NEPRA stated that the system has saved Rs 7.9 billion by generating electricity from coal, acknowledging that additional amount of Rs 3.6 billion was spent on expensive furnace oil-based generation and questioned why the cheaper fuel coal was not budgeted in place of RLNG. At this, General Manager National Power Control Centre (NPCC), Muhammad Ayub, replied that both fuels are part of the basket. He further stated that Petroleum Division did not supply the allocated quantity of gas/RLNG to the power sector due to which RFO-fired plants were operated.
Mubashar, Director Nepra, stated that if budgeted fuel had been used in December, then only price variance would have been payable. The Nepra has also approved previous payments and supplemental charges of Rs 9.09 billion for M/s Rousch Power, M/s Hub Power, M/s Fauji Kabirwala, M/s JPCL, M/s Orient (RLNG and HSD), Ms/ Nishat Chunian , M/s Engro Energy, M/s Halmore, M/s Engro Power Thar, M/s QAPTL, M/s HBS and M/s Balloki.
CPPA-G also sought previous adjustment of Rs 10.478 billion which constitutes Rs 1.397 per unit.
The Authority was informed that if previous amount/ supplementary charges are excluded, the total estimated increase in tariff is Paisa 33 or 35 per unit. Total increase would have been Paisa 18 per unit if furnace oil was not used in December 2020 for power generation.
The case officer informed that overall saving of Rs 8 billion was recorded in December due to better mix of generation.
Chief Financial Officer (CFO), CPPA-G, Rehan Ahmad, stated that the references of different fuels are based on 2017-18, adding that there would be no need for FCA if generation was in accordance with the estimated (budgeted) figures. He was of the view that the grid cannot operate on estimated assumptions.
Rehan argued that in December 2020 RFO-consumed generation was on higher side amounting to Rs 3.6 billion.
“We have to look to the on ground facts,” he said, requesting the Nepra to clear its pending amount of Rs 21 billion deducted in the past, due to non-provision of documentary evidence adding that the system operator (NPCC) saved consumers Rs 1 billion by running coal-fired power plants.
“The financial impact of better energy mix should be passed on to the consumers but at the same time it the responsibility of consumer to bear the impact of RFO generation,” he said.
The Vice Chairman Nepra Saifullah Chattha assured CFO CPPA-G that the Authority will clear this amount next month as the Authority is mindful that any delay in approval of due expenditure is subject to interest which is ultimately passed onto the consumers.
“We will make all-out-efforts to clear the due pending amount to CPPA-G within next two or three weeks,” Chattha maintained.
In December, total energy generated recorded at 7,879.86 GWh in December at a basket price of Rs 4.78 per unit. The total cost of energy was Rs 37.666 billion.
The sale to IPPs was reduced by 59.34 GWh, the price of which was Rs 728 million (Rs 0.0468 per unit) while cost of reduced transmission losses was Rs 256.63 million or Rs 0.2057 per unit.
The CPPA-G revealed net electricity delivered to Discos in December 2020 was 7,563.88/ GWh at a rate of Rs 6.2687 per unit, total price of which was Rs 47.416 billion.—MUSHTAQ GHUMMAN
