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Nepra approved monthly Fuel Charges Adjustment (FCA) for May 2021 the other day, allowing a decrease of 26 paisas per unit, as against sought decrease of 13 paisas per unit. Pretty standard monthly procedure one would say. You ask for adjustment, Nepra conducts a hearing, there is some deliberation, and you end up getting a little less than you ask for, for a variety of reasons.

But May’s FCA decision is a little more than usual as the regulator has hinted at the need of a detailed audit as the Central Power Purchasing Agency continues to be a failure as regards adhering to Nepra’s directions. Last month, the decision came with a note pointing at CPPA and NPCC for failure to implement Nepra’s direction for no less than 14 months, despite repeated reminders. Nepra had clearly mentioned the magnitude of financial implications the nonaction carries. This time, it is a hint at detailed audit.

What is it about? It is primarily about the complete justification of deviation from Economic Merit Order that has time and again led to certain efficient power plants not being fully utilized, and the load being transferred to the more expensive FO based plants, leading to higher fuel charges over the reference tariffs, and eventually higher adjustment needs.

Not that CPPA, NPCC and NTDC have not been responding at all, but the responses have not been to Nepra’s satisfaction – which requires detailed granular level information with reasonings of the events that lead to deviation from merit order. The compliance has been pending for 15 months. The regulator, given the importance of the task at hand, has been provisionally allowing adjustments, reminding the concerned authorities to comply with requirements, to no avail. The authorities too, seem to know fully well that the show will go on, and pay no heed.

The matter may well be trivial in the eyes of those who would just see the rather bigger picture. But often in these trivialities rest the real devil. Not everything is about the potential magnitude of financial impact in the short-term. The merit order violations have become so common that it has stopped being viewed as negligence by many observers.

Remember that these violations are breeding ground for incompetence, and then complacency, which then lead to more excuses framed every time the merit order is violated. Yes, there have been genuine reasons for violations too, but because of the non-compliance to the regulator’s queries, the chances of sinister violations arrive too. Here is hoping the power sector doers ensure the regulator is shown the respect it merits, and everything is not hushed in the nae of the bigger picture.

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