ISLAMABAD: Amid public criticism over efficiency and regulatory standards in the power sector resulting in unbearable electricity costs, the Central Power Purchasing Agency (CPPA) on Wednesday slightly lowered its demand for additional fuel cost adjustment (FCA) to Rs1.58 per unit — instead of Rs2.07 —for electricity consumed in July.

At a public hearing organised by the National Electric Power Regulatory Authority (Nepra), the CPPA representatives reported that a petition for Rs2.07 per unit had been filed on behalf of ex-Wapda Distribution Companies (Discos) to mop up Rs30 billion in September but had now been revised based on verified data and previous decisions of the regulator.

Under the revised request, Discos now required Rs1.58 per unit FCA to raise Rs23bn from consumers. About Rs3.6bn worth of claims would remain pending till the technical verification of old payables to four IPPs and one government plant while another Rs3.33bn claim had been withdrawn.

The participants attending the hearing physically and through video link raised questions about Nepra’s decision-making and oversight mechanism in its regulatory functions and poor performance and inefficiencies of the power sector companies including Discos, transmission system operators and National Transmission and Despatch Company (NTDC). Various companies passed the buck on each other for inaccurate electricity demand and actual drawls and making payments for transmission systems without actually utilising their capacity.

Chairman Nepra Wasim Mukhtar agreed that consumers should not pay for the inefficiencies, system disruptions and violations of economic orders for various reasons but said he was not answerable for his previous official positions while being part of the regulatory authority. A decision would be announced later.

On their part, the power companies confirmed there had been 166 violations of economic merit order in utilisation of power plants but most of them were because of valid technical reasons. They also conceded that 138 electricity towers had fallen in five years which was a very high rate. The NTDC chief said one of the reasons for system constraints for the non-availability of foreign exchange which was delaying about 41 projects and tower collapse were because of three well-known gangs involved in the theft of cable strips.

He said despite the involvement of military intelligence, rangers and other authorities, change in power theft laws and theft had been controlled to an extent of 90pc adding that the menace could not be eradicated.

Cheaper generation

The additional FCA has emerged despite almost 64pc power generation from domestic cheaper fuel in July which was higher than 58pc in June, 56pc in May and 54pc in April. The increase in FCA is even though the base average tariff has gone up by more than Rs7.5 per unit last month. The additional cost is also despite the fact that the country’s hydropower plants made a health contribution of over 37pc to the overall national power grid in July against 26.96pc in June. Hydropower has no fuel cost.

The LNG-based power generation at 19.67pc slightly improved in July when compared to 18.55pc in June but was down lower than its 24.33pc share in May. LNG-based power generation, nevertheless, maintained its second position after hydropower. The third largest share came from coal-based generation at 14.69pc in July, down from its 17.75pc share in June. The nuclear generation slightly improved to 14.2pc in July against 13.54pc in June and 12.6pc in May but was still way behind its 19pc in April and 24.28pc in February.

Power supply from domestic gas continued its downward journey and contributed just 7.61pc to the national grid in July against 8.54pc in June, 10.35pc in May and 12pc in April.

The fuel cost of furnace oil-based power generation increased to 28.7 per unit in July against Rs26.1 per unit in June and Rs23.24 per unit in May. The LNG-based power generation cost in July slightly increased to Rs24.43 per unit against Rs24.07 in June. Furnace oil-based generation in July was contained at 2pc in the overall basket when compared to 5.4pc in June.

The cost of power generation from domestic gas increased to Rs13.7pc unit in July when compared to Rs11.74 per unit in June because of an increase in gas prices notified by the government.

Coal-based power generation cost, on the other hand, dropped to Rs11.54 per unit in July against Rs14.05 per unit in June. This included Rs28 per unit from imported coal and Rs8 per unit from local coal.

Three renewable energy sources — wind, bagasse and solar — together contributed about 4.5pc share to the national grid in July, down from its 5.6pc share in June and 6.6pc May. Wind and solar have no fuel cost, while that of bagasse-based generation cost remained unchanged at about Rs6 per unit.

Published in Dawn, August 31st, 2023