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FCA for November 2021: Nepra may allow proposed Rs4.33 hike in tariff - Inside Financial Markets

FCA for November 2021: Nepra may allow proposed Rs4.33 hike in tariff

– Business Recorder

ISLAMABAD: National Electric Power Regulatory Authority (Nepra) on Wednesday hinted at allowing the entire proposed increase of Rs 4.33 per unit in tariffs of Discos under monthly Fuel Cost Component (FCA) for November 2021, after CPPA-G requested that recovery of pending amount of Rs 6 billion with respect to Uch-II should not be withheld as financial constraints are already in sight due to higher prices of fuel in January 2022.

CPPA-G will pass on financial burden of Rs 35.7 billion to consumers of Discos across the board except lifeline consumers. The consumers of KE will also have to bear the financial impact of November’s FCA on the electricity purchased from the national grid.

This was the crux of a public hearing held in Nepra on the tariff adjustment request of CPPA-G. The hearing was officiated by Chairman Nepra, Tauseef H. Farooqui; Member Sindh, Rafique Ahmad Shaikh; Member Balochistan, Rehmatullah Baloch and Member KP, Maqsood Anwar Khan. During the hearing, it was noted that generation from hydel resources was 5.80 per cent and coal 11.04 per cent lower, respectively, against the reference generation targets.

The Authority was informed that 14 per cent extra generation was recorded in November 2021 vis-à-vis reference generation, mostly from expensive fuels. The impact of higher fuel prices has been calculated at Rs 26 billion. The overall financial impact of deviation from Economic Merit Order (EMO) was Rs 62.36 million, of which Rs 55.77 million was related to non-availability of RLNG whereas Rs 6.59 million was on account of underutilization of efficient power plants. This time the regulator was visibly lenient with respect to deviation from EMO as Chairman was aware of facts about short supply of RLNG to the power plants against their booked demand.

During the hearing, Chairman Nepra raised the issue of 11 per cent less generation from coal, which was cheaper compared to other fuels like, furnace oil, High Speed Diesel (HSD) and RLNG.

NPCC officials stared that the difference of 11 per cent in generation from coal against the reference benchmark, was due to forced outage of China Hub, which will commence operation from January 2022, whereas Engro Thar, etc., were on scheduled outages.

Chairman Nepra expressed his displeasure on scheduled outages of coal plants at a time when other expensive fuels are being consumed for generation. The officials of NPCC gave their justifications about scheduled outages arguing that the situation is so erratic that merit order is being changed before the schedule is fixed. It was decided that NPCC and Nepra officials will sit together prior to finalization of annual schedule for maintenance of power plants.

The regulator also agreed to allow pending amount of Rs 6 billion on account of Uch-II after acting CEO CPPA-G, Rehan Akhtar requested that if this amount was not allowed, CPPA-G would face financial constraints in payment for expensive fuel in January 2022. He further contended that in case the regulator does not allow this amount, payment of interest will start from next month which will also have to be recovered from consumers. After hearing the arguments of acting CEO, CPPA-G, Chairman Nepra showed leniency and directed Nepra’s tariff section to verify the claims so that amount of Rs 6 billion also be allowed to CPPA-G.

During the hearing, it was also noted that electricity consumption has increased by 14 per cent as about additional 500 MW of electricity was used in November 2021. It was also noted that NTDC is working on projects of Rs 32 billion to improve transmission system. With this investment, NTDC would be able to supply additional power of up to 1800 MW next year. Chairman Nepra also cited a telephonic conversation with Chairman OGRA on the possibility of use of furnace oil for power generation due to limited storage capacity of oil refineries. Acting CEO, CPPA-G Rehan Akhtar argued that expensive electricity cannot be generated by violating merit order, adding that only the power sector cannot bear the burden of operations of oil refineries. On a complaint that Discos are sending inflated bills with massive adjustment in FCA, Chairman Nepra remarked that he was also startled after seeing the October bill due to substantial FCA. He maintained that consumers who are receiving unconvincing bills should approach regional offices of Nepra.

Syed Zaki Hussain

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