ISLAMABAD (PEN) : It sounds like the government is requesting approval from the National Electric Power Regulatory Authority (Nepra) to implement an additional fuel cost adjustment (FCA) of Rs3.5 per unit for electricity consumed in April. This adjustment aims to extract over Rs29 billion from consumers. It’s common for adjustments like this to be made to cover the costs of fuel used in electricity generation, but they can be a point of contention for consumers concerned about rising electricity bills. The situation becomes more nuanced with the revelation that a significant portion of the power supply in April was generated from cheaper local fuels, comprising 75% of the overall power supply. Despite this, the Central Power Purchasing Agency (CPPA) has petitioned for a substantial increase in the fuel cost adjustment (FCA) of Rs3.4883 per kWh, which is significantly higher than the pre-fixed fuel cost.
This demand highlights potential discrepancies in forecasting fuel costs within the power sector bureaucracy. The proposed increase in FCA, combined with previous tariff adjustments, could lead to a considerable burden on consumers, particularly as consumption rises during hotter months.
The reasons cited for the higher proposed FCA include lower availability of hydropower, increased domestic coal and gas prices, and greater utilization of LNG, which has seen a rise in prices. This increase in FCA contrasts with a decrease in consumption compared to the same period last year, influenced by lower temperatures and changed consumption patterns.
LNG-based power generation notably played a significant role in the national grid, contributing 25% in April. However, it’s important to note that the cost of LNG-based power generation increased slightly compared to the previous month.
Renewable energy sources, including wind, bagasse, and solar, contributed to the grid as well, with a slight increase compared to the previous month. These sources, particularly wind and solar, have the advantage of no fuel costs associated with their generation.
Once approved by Nepra, these increases in FCAs will impact consumers’ bills in June, potentially exacerbating concerns about rising electricity costs despite a significant portion of the energy being generated from cheaper local sources.