The National Electric Power Regulatory Authority (Nepra) is likely to allow tariff increase of up to Rs4.75 per unit to power distribution companies on account of fuel cost adjustment (FCA) for October 2021.

At the public hearing of a petition filed by the Central Power Purchasing Agency-Guarantee (CPPA-G) for monthly FCA, headed by Nepra Chairman Tauseef H Farooqi, the regulator pointed out that it was worried about the increase in electricity tariff.

In the petition submitted on behalf of distribution companies, the CPPA-G said that the reference fuel charge for consumers was set at Rs5.1733 per unit while the actual fuel cost came in at Rs9.9261 per unit. Therefore, the CPPA-G should be allowed to pass the increase of Rs4.7528 per unit on to consumers.

Owing to decrease in hydroelectric, wind, bagasse and solar power generation, power plants used expensive fuel such as high-speed diesel, furnace oil and liquefied natural gas (LNG) in October, which pushed up generation cost to almost Rs10 per unit.

In September 2021, the cost of electricity generation stood at Rs7.6816 per unit.

The regulator was told that excessive use of furnace oil was one of the reasons behind the expensive electricity while high-speed diesel-based generation increased from 2.34 gigawatt-hours (GWh) in September to 57.10 GWh in October.

The electricity generated with the help of furnace oil increased to 1,228.66 GWh in October from 997.44 GWh in September, costing Rs21.2273 per unit. Power producers used furnace oil worth Rs26 billion in October.

The cost of diesel-fired electricity was even more expensive at Rs25.2250 per unit.

When Nepra asked why furnace oil was used excessively, CPPA-G officials responded that some plants had technical problems, therefore, the gap was bridged with the consumption of furnace oil.

“Expensive fuel consumption is increasing the burden on consumers,” Nepra Vice Chairman Rafiq Sheikh remarked and asked how could the situation be improved?

“We have been asking to implement cheap solar projects,” Nepra chairman stressed, adding “we also gave a tariff of Rs3.5 per unit for 12 solar projects but these projects were not working.”

Published in The Express Tribune, December 1st, 2021.

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