Import pricey fuel or brave long outages: NEPRA chief.

ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) noted on Monday, while finalizing 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 endure load shedding or generate electricity using expensive fuel oil.

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

The Central Power Purchasing Agency (CPPA), on behalf of all ex-Wapda Discos, requested a 134 percent increase in their fuel price adjustment of Rs7.9647 per unit (kwh) for electricity sold in the month of May. In May, users were charged a reference fuel cost of Rs5.932 per unit, but the actual cost was Rs13.90 per unit, resulting in an extra charge of approximately Rs7.96.

After minor disallowances, the regulator finalized Rs7.90 per unit of additional FCA. In response to inquiries about the high cost of power generation, CPPA representatives indicated that fuel costs had nearly tripled. According to them, the LNG was unavailable on the market because it was being purchased by European nations with deep pockets, and even if an LNG cargo could be located, it would cost close to $42 per mmBtu, which was not in the consumers’ best interest.

Mr. Farooqui stated that under the current circumstances, Pakistanis must either import costly fuel oil or endure power outages. Rather than relying on foreign fuels, power plants should rely on cheaper local resources in the future, he said.

Officials from the CPPA stated that imported fuel, particularly coal, furnace oil, and LNG, was not only expensive but also increasingly unreliable in terms of availability, which led to the price increase.

In the upcoming billing month (July), all consumers would be charged the higher electricity rates, save those who use fewer than 50 units per month. This tariff is not directly applicable to KE users, but a portion of it is afterward incorporated into KE’s tariff adjustments due to its import from the national grid.

At the hearing, it was stated that nearly 54 percent of power generation came from domestic resources with lower costs and stable rates. In comparison to 50.58pc in April and 45pc in March, domestic fuel sources increased to a solid 54pc in May, compared to 50.58pc in April and 45pc in March. In May, the hydropower supply percentage increased to 24.5 percent from 18.55 percent in April and 16.35 percent in March. Hydropower has no fuel cost.

In May, the share of nuclear electricity declined dramatically from April’s 17.4 percent to approximately 13 percent, primarily due to maintenance at one of its large units. Nonetheless, nuclear energy maintained its second-place position among domestic fuels.

Imported RLNG contributed approximately 23 percent to the overall electricity supply in May, up from 19.4 percent in April and March. In May, the percentage of domestic gas used in power generation grew to 10 percent from 9.85 percent in April.

In May, the proportion of coal-based power plants decreased to 13.8% from 16.74% in April and 25% in March due to limited coal stockpiles, financial constraints of power producers, and higher global pricing. In January and February, coal-fired generation accounted for 33 and 32 percent of total power generation, respectively.

In May, the cost of generating electricity from domestic gas rose to Rs10.12 per unit, up from Rs8.4 per unit in April and Rs7.75 per unit in March.

Three renewable energy sources — wind, bagasse, and the sun — provided 6.5% of the total energy supply. Wind and solar energy have no fuel cost, whereas bagasse has a fuel cost of Rs5.98 per unit.