ISLAMABAD: Power utilities have sought permission to raise Rs44 billion additional funds in April by charging Rs3.45 per unit additional fuel cost from the consumers of K-Electric and Rs5 from those of all other distribution companies (Discos).

The National Electric Power Regulatory Authority (Nepra) has summoned two separate public hearings on March 31 and April 4 to examine if the demands for higher fuel cost adjustment (FCA) by ex-Wapda Discos and KE are justified.

The Central Power Purchasing Agency (CPPA), on behalf of all Discos, has sought more than 117 per cent increase in their FCA to Rs9.2 per unit for electricity sold in January to generate about Rs39bn additional funds. K-Electric has demanded Rs3.45 per unit additional FCA for February to generate about Rs4bn revenue.

The two demands by the CPPA and KE would effectively negate the impact of Rs5 per unit tariff discount announced by Prime Minister Imran Khan for four months. It has increasingly become common that the reference fuel costs approved by the government and the regulator turn out to be highly unrealistic — a question mark on their economic and financial analytical skills.

If approved, rise would negate impact of discount recently announced by PM

In recent months, the actual fuel costs have ranged 56pc to 117pc higher than the reference rate. This results in sudden price shocks to consumers on account of monthly fuel adjustments on top of the repeatedly increasing base power tariff apparently at the behest of foreign lenders.

On behalf of Discos, the CPPA has claimed that consumers were charged a reference fuel cost of Rs4.25 per unit in January, but the actual cost turned out to be Rs9.2 per unit, hence an additional charge of about Rs5 per unit to consumers.

The higher electricity rates, once approved, would be charged to all consumers in the next billing month (April), except those using less than 50 units per month.

Data showed that the share of domestic fuel sources in overall power generation in February was robust (46pc). The share of hydropower supply in the overall basket improved to 18.22pc in February against just 5.83pc in January. Hydropower share stood at 20pc in December, 33.2pc in November and 23.26pc in October. Hydropower has no fuel cost.

As a result, the biggest contribution of over 32pc in overall power supply came from coal-based power plants in February — 1pc lower than its 33pc share in January. The coal-based power generation had only 24pc share in the national grid in December and 16.3pc in November. Its fuel cost also slightly reduced to Rs13.1 per unit in February from Rs14.10 in January.

This was followed by another major chunk of 15pc fuel generation from LNG, 12.53pc supply from nuclear power, 11.4pc from domestic gas and 6.5pc from furnace oil-based plants in February.

In comparison, nuclear power plants had contributed 14pc electricity to the national grid in January. The fuel cost of nuclear electricity also increased to Rs1.13 per unit in February against Rs1.075 in January and Rs1.05 in December. The cost of power generation from domestic gas slightly increased to Rs8.12 per unit in February from Rs7.75 in January. The domestic gas produced 13.8pc electricity in December, 13pc in November, 9.67pc in October, 8.9pc in September and 8.17pc in August.

Published in Dawn, March 21st, 2022