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Discos seek 53pc hike in fuel charges for September

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ISLAMABAD: The share of inexpensive hydropower in overall power generation has gone up, but ex-Wapda distribution companies (Discos) have sought a 53 per cent increase in fuel charges (Rs2.66 per unit hike) for electricity consumed in September mainly due to expensive imported fuels — coal, LNG and furnace oil.

The National Electric Power Regulatory Authority (Nepra) has accepted the petition for public hearing on Oct 27 to examine if data and reasons provided by the power companies for such a massive tariff hike were justified, which comes on top of an average base tariff increase of Rs1.39 per unit announced by the government.

On behalf of all the ex-Wapda Discos, the Central Power Purchasing Agency (CPPA) has demanded an additional charge of about Rs2.66 per unit from consumers of Discos on account of higher generation cost of electricity consumed in September to generate about Rs36 billion in additional cash flows to power companies.

The CPPA said the Discos had charged consumers a reference fuel tariff of Rs5.023 per unit in September, but the actual fuel cost turned out to be Rs7.68 per unit, up 53pc. Hence, an additional fuel cost of Rs2.66 per unit should be charged to consumers in the coming month.

Nepra convenes public hearing for Oct 27

It is becoming increasingly normal that actual fuel costs turn out to be substantially higher than reference rates approved by the power sector’s bureaucracy a few months ago, calling into question their capabilities of projecting fuel price trends or a sudden surge in imported oil prices. A month earlier, the actual fuel cost turned out to be 44pc higher than the reference fuel cost.

The higher electricity rates, on approval by the regulator, would be recovered from consumers in the coming billing month (November).

Interestingly, the share of hydropower supply increased to 36.24pc in September from about 35pc in August and had no fuel cost. On the other hand, LNG-based power contribution also increased to 18.9pc in September when compared to 18pc in August.

The CPPA reported that total energy generation from all sources in September stood at 14,032 gigawatt hour (GWh) at a cost of Rs95.36bn or Rs6.80 per unit. Of this, about 13,629 GWh were delivered to the Discos at Rs104.7bn, at an average rate of Rs7.68 per unit.

When compared with (September 2020, the power generation increased by about 7pc while the overall fuel cost went up by almost 65pc. Of this, LNG-based fuel cost more than doubled (up 120pc) when compared with last year while coal-based fuel cost was higher by 65pc when compared to September 2020.

The share of coal generation stood at 17pc in September against 14pc in August, 18pc in June and 20pc in May.

On the other hand, the generation from furnace oil-based plants stood at 7.1pc in September against 10.12pc in August, 14pc in June, 6pc in May and 2.62pc in April. The share of RLNG-based power generation to national grid stood at 18.9pc in September, against 18pc in August, 20pc in July, 18.8pc in June 22pc in May. The share of local gas-based generation slightly increased to 8.9pc September against 8.17pc in August.

On the other hand, the share of nuclear power slightly dropped to 9.13pc in September against 10pc in August and 11.27pc in June. The share of wind power and baggase stood at 1.76pc in September against 4pc in August.

The coal-based fuel cost also increased to Rs10.1 per unit in September against Rs9 per unit in August and Rs8 per unit over the past few months. Nuclear energy fuel cost stood 98 paisa per unit while power produced from local gas remained unchanged at Rs8.3 per unit.

Published in Dawn, October 21st, 2021

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