Despite a significant 79% power generation from cost-effective local sources, power sector entities are requesting an additional Rs23 billion through fuel cost adjustment (FCA) for electricity consumed in March. The Central Power Purchasing Agency (CPPA) is seeking approval from the National Electric Power Regulatory Authority (Nepra) to impose an extra Rs2.94 per unit in fuel costs on consumers for the upcoming billing cycle.
This proposed increase, amounting to nearly 46% more than the previous fuel cost, raises concerns about the accuracy of forecasting fuel expenses in the power sector. Recent months have seen additional FCAs ranging between 50% and 115% above the initial fuel cost estimates.
The FCA rise is in addition to a 26% increase in annual base tariffs and a 10% hike under quarterly adjustments, resulting in consumers paying higher bills despite reduced consumption. This situation persists despite a significant portion of electricity being sourced from cheaper local resources.
The higher FCA for March is attributed mainly to increased prices of domestic coal and gas, even though imported fuels like coal, diesel, and furnace oil were not utilized. LNG remained relatively affordable, and exchange rates remained stable during this period.
The CPPA’s petition highlights a significant disparity between the reference fuel cost and actual expenses, citing an average fuel cost of Rs9.38 per unit compared to the reference cost of Rs6.44 per unit. March also saw a decrease in consumption by 8.3% compared to the previous year.
Nepra is set to review this petition on April 26, considering the impact on consumers and the power sector’s financial dynamics.
Courtesy: Dawn
