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Monthly FCA: Discos’ tariff up Rs4.30 for Nov 2021 - Inside Financial Markets

Monthly FCA: Discos’ tariff up Rs4.30 for Nov 2021

– Business Recorder

ISLAMABAD: National Electric Power Regulatory Authority (Nepra) has increased electricity tariff of power Distribution Companies (Discos) by Rs 4.30 per unit for November 2021 under monthly Fuel Component Adjustment (FCA).

The increase shall be applicable to all the consumer categories except lifeline consumers. The consumers of KE will have to face the impact to the tune of over 1000MW electricity being purchased from national grid. Central Power Purchasing Agency Guaranteed (CPPA-G), in its request, had sought positive adjustment of Rs4.33 per unit in FCA for November 2021.

Two members of the Authority have submitted dissenting notes on the determination finalized by the Authority. The Authority reviewed the information provided by CPPA-G seeking monthly fuel cost adjustment (FCA) and due diligence is done accordingly.

From perusal of the information so provided by CPPA-G, the actual pool fuel cost for the month of November 2021 is Rs8.071/kWh, against the reference fuel cost component of Rs3.7381/kWh as indicated in the Annexure-IV of the notified consumer-end tariff of Ex-WAPDA DISCOs for the FY 2019-20. The actual fuel charges, as reported by CPPA-G, for the month of November 2021 increased by Rs4.3329/kWh as compared to the reference fuel charges.

During the hearing on December 29, 2021, the Authority observed that CPPA-G has purchased energy of 36.692 GWh from Tavanir Iran in November 2021 at a cost of Rs483.4 million.

The Authority also observed that CPPA-G has filed its request with the Authority for approval of extension of contract between CPPA-G and Tavanir Iran for import of power up-to 104 MW for the period from January 01, 2020 to December 31, 2021, which is under consideration of the Authority.

According to Nepra, cost of electricity purchased from Tavanir Iran is being allowed strictly on provisional basis, subject to its adjustment once the Authority decides the extension in the contract between CPPA-G and Tavanir Iran. The cost being allowed on provisional basis is to avoid piling up of the cost and one time burdening of the consumers in future.

CPPA-G also claimed an amount of Rs13.585 billion on account of previous adjustments in the FCA of November 2021. Nepra has verified as Rs13.367 billion and accordingly has been included in the monthly FCAs of November 2021.

Regarding adjustment of Uch-Il, CPPA-G has claimed an amount of Rs6.214 billion pertaining to the period from November 2013 to December 2019, owing to revision in gas well head prices by OGRA. Upon directions of the Authority, CPPA-G provided verified invoices for the relevant period, whereby, the amount claimed has been revised as Rs6.031 billion.

However, as per verification by the Authority regarding energy and PPA factors based on the data provided by CPPA-G, the amount of previous adjustments works out as Rs5.955 billion, which has accordingly been included in the monthly FCA of November 2021.

During the hearing, the Authority also observed that, prima facie, certain efficient power plants were not fully utilized and instead energy from costlier RFO/HSD based power plants was generated to the tune of over Rs3.627 billion during November 2021.

The Authority has been directing NPCC/NTDC & CPPA-G repeatedly to provide complete justification in this regard, to the satisfaction of the Authority and submit complete details for deviation from Economic Merit Order (EMO), showing hourly generation along-with the financial impact for deviation from EMO, if any, and the reasons, thereof.

Vice Chairman Nepra, Rafique Ahmad Shaikh, in his dissenting note said that as the case officer report is based on the data submitted by NPCC, the average RLNG allocated to the power sector was 375 MMCFD against the total demand of 472 MMCFD, resulting in financial impact of Rs 55.77 million during November 2021.

According to him, RLNG being imported fuel can be managed/ensured through better supply chain management and accordingly impact of such mismanagement into the non-availability of RLNG can not be passed on the consumers.

Shaikh argued that although, the Authority, in its decision of February 3, 2011 is of the considered opinion that “non-operation of efficient power plants due to non-availability of RLNG shall be considered as constraint and no deduction be made in monthly FCA on this account.”

Further, The Authority has the task to Legal Advisor to check whether as per law due to shortage of RLNG, the cost can be deducted from FCA claims of CPPA-G or otherwise.

The Law Officer has opined that “RLNG is an imported fuel, and reportedly, responsibility for allowing import of it lies with the Federal Government. NTDC had conveyed the requirement for RLNG to the Federal Government in a timely manner. However, if the RLNG could not be made available, it may not be made basis for penalty.”

The relevant power sector entities regulated by Nepra, particularly when the existing GSAs are based on “as and when available basis” the entity responsible for import of RLNG is not regulated by Nepra, and therefore, Nepra cannot taken any action against it.

“I disagree with the decision of the learned Authority members as well as Legal Advisor opinion on the pretext that one of the primary responsibilities of Nepra is to protect the consumers. Since shortage of RLNG is only due to supply chain management and governance issues and is beyond the purview of electricity consumers,” said Shaikh.

He further contended that the burden of mis-governance and inefficiencies can’t be shifted on to the electricity consumers. Member KP, Energy Maqsood Anwar Khan, in his dissenting note said that the under-utilization of the efficient power plants due to the non-availability of RLNG can be avoided if the Ministry of Energy through its Petroleum Division had timely assessed, planned and managed the availability of RLNG.

Syed Zaki Hussain

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