Basis for fixation of base tariff: Rupee could hit 325 mark vs dollar by June 2024: PD

ISLAMABAD: The Power Division is said to have projected that Pak rupee could touch Rs 325 per US$ by June 2024, which is likely to be the basis for fixation of base tariff for FY 2023-24, well-informed sources told Business Recorder.

An increase between Rs 4-5 per unit is expected to be approved by the government and implemented from July 1, 2023 due to massive depreciation of Pak rupee during 2022-23. The government has given assurance to International Monetary Fund (IMF) that due increase in base tariff will be implemented from FY 2023-24.

The sources said Central Power Purchasing Agency–Guaranteed (CPPA-G), an arm of Power Division which performs the role of Market Operator has worked out economic parameters for Power Purchase Price (PPP) FY-24 and submitted it to the top brass of the Power Division. These assumptions were worked out before announcement of a staff level agreement on a nine month Stand-By Arrangement with the IMF.

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According to CPPA-G assumption, the value of Pak rupee will decline by Rs 3 per month versus the dollar in the current fiscal year and will touch Rs325/$ by the end of the fiscal year. The assumption for July 2023 has been worked out at Rs291/$, though the actual rate may well differ.

The CPPA-G assumptions further indicate that total power demand growth will be 133,258 GWh during the financial year, of which 14,579 GWh will be in July, 14,474 GWh in August, 13,264Gwhin September, 11,026 GWh in October, 8618 GWh in November and 8,669 GWh December 2023.

Estimated electricity generation in January 2024 will be 8,770 GWh, February, 7,988 GWh, March, 9,005 GWh, April 10,312 GWh, May 13,640 GWh and June 12,913 GWh.

The projected price of imported coal (API-4) will touch $ 112.5/ MT by June 2024 starting from $ 106/MT whereas price of Brent crude oil will range from $ 80/bbl to $ 85/bbl. The price of local gas is estimated at Rs 1,050/MMBTU throughout the financial year

Kibor will be down to 16 percent by June 2024 from 22 percent in July 2023 whereas Libor will remain at 5.32 percent.

Pakistan’s inflation will remain in the range of 28.23 percent during the entire financial year while the US inflation is estimated at 4.93 percent.

Copyright Business Recorder, 2023