Import expensive fuel or face long outages: Nepra chief

ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) said on Monday, while deciding on an unprecedented Rs7.90 per unit additional fuel cost adjustment (FCA) for distribution companies (Discos) for next month, that Pakistan had no choice but to deal with load shedding or use expensive fuel oil to make electricity.

Chairman Nepra Tauseef H Farooqui, who presided over the event, stated during a public hearing on a petition for an Rs7.96 per unit increase in FCA for electricity used in May that, while a formal notification would be issued later after the verification of evidence, the minimum increase in FCA would be about Rs7.90 per unit for ex-Wapda Discos with a financial impact of Rs113bn during the following billing month (July).

On behalf of all ex-Wapda Discos, the Central Power Purchasing Agency (CPPA) requested a 134 percent increase in the fuel price adjustment at the rate of Rs 7.9647 per unit (kwh) for energy sold in May.

According to the report, consumers were charged a reference fuel cost of Rs5.932 per unit in May, but the actual price was Rs13.90 per unit, resulting in an extra fee to consumers around Rs7.96.

However, after a few minor rejections, the regulator set the additional FCA price at Rs7.90 per unit. The CPPA executives responded to inquiries about pricey power generation by stating that fuel prices had increased roughly three times. They said the LNG was not readily available since wealthy European countries were snatching it up. Even if an LNG cargo could be located, it would cost close to $42 per mmBtu, which was not in the consumers’ best interests.

Unexpected Rs7.90 per unit extra FCA approved for July

According to Mr. Farooqui, Pakistanis must either import expensive fuel oil or put up with load shedding in the current situation. For the love of God, he said, power plants ought to be run on less expensive local resources rather than imported fuels in the future.

The cost of imported fuel, particularly coal, furnace oil, and LNG, was escalating because it was expensive and difficult to get.

All customers in the upcoming billing month (July) would be subject to the higher electricity charges, except those who use fewer than 50 units per month. Although a portion of this tariff is later included in KE’s tariff adjustments due to its import from the national grid, it does not directly apply to KE users.

Nearly 54% of the power generated in the hearing came from domestic resources with stable prices that were less expensive.

According to data, the proportion of domestic fuel sources in total power generation increased to a healthy 54 percent in May from 50.58 percent in April and 45 percent in March. From 18.55 percent in April and 16.35 percent in March, the share of hydropower supply in the whole basket increased to 24.5 percent in May. There is no fuel expense for hydropower.

Since one of its ample facilities needed repair, the share of nuclear power was 17.4 percent in April, but just 13 percent in May, which has drastically decreased. But among domestic fuels, nuclear power remained in second place.

In May, imported RLNG made up roughly 23 percent of the total electricity supply, compared to 19.4 percent in April and March. Domestic gas’s percentage in electricity production grew marginally from 9.85 percent in April to 10 percent in May.

There were 13.8 percent fewer coal-based power plants in May than in April (16.74 percent) and March (25 percent) due to low coal stocks, financial constraints on power providers, and higher global coal prices. In January and February, respectively, 33 and 32 percent of the total power supply came from coal-fired generating.

As opposed to Rs8.4 per unit in April and Rs7.75 in March, the cost of producing electricity from domestic gas jumped to Rs10.12 per unit in May.

Together, the three renewable energy sources of wind, bagasse, and solar-generated 6.5 percent of the nation’s total power supply. Fuel costs for wind and solar are zero, but bagasse’s price has been computed at Rs5.98 per unit.