Despite March’s Cheaper Generation, Discos Hope to Raise Rs 10 Billion

Electricity consumers in Pakistan may face an additional cost of around Rs10 billion in May due to an increase in fuel cost adjustments (FCA) proposed by the ex-Wapda distribution companies (Discos).

The Central Power Purchasing Agency (CPPA) filed a tariff petition on behalf of the Discos, and the National Electric Power Regulatory Authority (Nepra) accepted it.

Nepra has scheduled a public hearing for May 3 to determine whether the proposed tariff increase is justified under the monthly FCA mechanism.

If approved, the Discos would charge an additional Rs1.174 per unit to their consumers for electricity consumed in March, amounting to approximately Rs9.93bn.

Despite a base average tariff increase of more than Rs7 per unit and a contribution of 63.5% from domestically priced fuels, this is the case.

In March, the national power grid received 22.90% of its energy from nuclear and hydropower generation, with hydropower generation being somewhat lower in March than in February. Comparing March to February, the share of nuclear power was also on the lower end.

Nuclear fuel costs just Rs1.08 per unit while hydropower has no associated fuel costs. In March, the national power grid received 20.42% of its energy from LNG, compared to 15.3% from coal power plants. Compared to February, when it made up 11% of the power supply, domestic natural gas now makes up 12.66%.

Fuel costs for RLNG-based power generation were higher at Rs24.31 per unit compared to Rs21.27 for furnace oil-based power generation. However, LNG generated 20.42% of the electricity, compared to furnace oil’s 0.46%.

In March, the price of producing electricity from domestic gas increased slightly to Rs11.26 per unit, up from Rs10.07 in February and Rs10.5 in December 2022.

The cost of producing electricity from furnace oil was close to Rs21.27 per unit, a significant decrease from Rs34 per unit just a few months earlier, primarily due to a drop in the price of crude oil internationally.

Coal-based power generation cost dropped significantly to Rs8.68 per unit in March when compared to Rs12.57 per unit in February and Rs11.5 per unit in December 2022.

In March, the national grid received about 5% of its energy from renewable sources like wind, bagasse, and solar, up from 3.54% in February and roughly 4.54% in January of this year.

The cost of fuel for wind and solar energy is zero, while the cost of fuel from bagasse increased from Rs5.35 per unit in February to Rs5.98 per unit in March.

According to the CPPA, consumers were charged Rs. 8.22 per unit as a reference fuel cost in March, but the actual cost was actually Rs. 9.89, resulting in an extra charge of Rs. 1.174 per unit.

According to the CPPA, the generation units generated about 8,741 Gigawatt hours at an average fuel cost of Rs71.83 billion, and about 8,459 GWh were delivered to Discos at a rate of Rs9.89 per unit at an estimated average fuel cost of Rs83.63 billion.

Concerns have been expressed by Pakistani electricity consumers, who are already bearing the brunt of rising electricity costs, about the proposed increase in FCA.

Stakeholders will have the chance to voice their concerns and offer suggestions at the Nepra public hearing on May 3 for the regulator to take into account before making a final decision.

Written by Imad Khan

Imad Khan has the skills and experience to deliver top-notch content that informs, engages, and inspires. He oftens explores nature in his free time.