NEPRA Approves Hike of Rs. 4.74 in Electricity Prices

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The National Electric Power Regulatory Authority (NEPRA) on Thursday increased the power tariff by Rs 4.74 per unit on account of fuel charges adjustment for October 2021

The increase will have an impact of around Rs. 60 billion, as expensive power was produced on imported furnace oil and diesel in the absence of required liquefied natural gas (LNG) supplies. The financial burden on consumers of ex-WAPDA distribution companies (Discos) will be reflected in the bills of December. However, the consumers of K-Electric and lifeline consumers will be exempted from the surcharge.

The cost of the fuel used in power plants is a pass-through item and is paid for by consumers. As per the petition filed by the Central Power Purchasing Agency (CPPA), 10 percent more electricity has been generated from furnace oil in October. According to a CPPA briefing, the use of expensive furnace oil and rising global prices have resulted in generating expensive electricity.

During a hearing at NEPRA last week, CPPA informed the authority that violation of merit order resulted in a burden of over Rs. 1.77 billion and LNG shortage had caused a burden of over Rs. 1.69 billion.

NEPRA officials revealed that less electricity could have been generated from furnace oil had the LNG supply been in accordance with the demand. They said 15 percent of electricity, instead of 25 percent, had been generated from coal. It was disclosed that a unit of the China Hub Power plant had been off-the-grid for the last six months.

As per NEPRA notification, fuel price was determined at Rs. 5.17 per unit whereas electricity generated was at Rs. 9.91 per kWh. The authority, despite having reservations on the violations of merit order, generation of electricity on expansive imported fuels, and losses over rupee devaluation, allowed the distribution companies to charge their consumers an extra Rs. 4.74 per unit additional for each unit they consumed in October.

To put it simply, a consumer who used 300 units of electricity in the month of October will have to pay Rs. 1422 more for the cost of electricity and an additional 17 percent GST on the additional cost which comes to Rs. 241.74.

Source: Pro Pakistani