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Print Print 2024-02-01

Nepra voices its concern: Massive cut in use of powerby industries

  • A public hearing was conducted on a proposal of positive adjustment of Rs 5.62/kWh in tariffs of power Distribution Companies
Published February 1, 2024

ISLAMABAD: The National Electric Power Regulatory Authority (NEPRA) on Wednesday raised its concerns over massive reduction in consumption of electricity by the industrial sector due to higher electricity rates in the country.

These remarks were expressed during a public hearing on a proposal of positive adjustment of Rs 5.62/kWh in tariffs of power Distribution Companies (Discos) for the month of December 2023 under monthly Fuel Charges Adjustment (FCA) mechanism. The adjustment would be recovered in bills of month of February 2024.

The Authority comprising, Chairman Nepra Waseem Mukhtar, Member (Technical) Sindh Rafique Ahmad Shaikh, Member (Tariff and Finance) Mathar Niaz Rana and Member KPK Maqsood Anwar Khan officiated a hearing in this regard. The Authority did not challenge any of the figures submitted by the CPPA-G, which implies the requested positive adjustment of Rs 5.62 per unit will be passed on to the consumers to recover additional amount of Rs 41.69 billion.

Power sector: Nepra backs transition from Libor to ‘SOFR’

Chief Executive Officer (CEO), CPPA-G, Rehan Akhtar, however, made a point that FCA of November 2023 of Rs 4.13 per unit will be replaced by Rs 5.62 percent of December 2023, which implies that net impact of consumers’ tariff will be Rs 1.49 per unit in bills of February 2024.

CEO CPPA-G further stated that overall electricity consumption declined by 10 per cent in December 2023. He argued that industry was expecting a winter package which prompted it to reduce its production but the package was not approved.

Expressing concerns on a continuous upward trajectory of FCA, Member KPK Maqsood Anwar Khan noted that a delegation of APTMA met him on January 30, 2024 and informed him that they had reduced their electricity consumption by 31 per cent in December 2023 due to higher electricity tariff.

They (APTMA) claimed that textile industry’s consumption will have further dipped by 50 per cent in January 2024. A representative of steel industry requested NEPRA to follow its own timeframe for determinations of tariff so that industry could include it in its working on a timely basis.

Member (Tariff and Finance) Mathar Niaz Rana also expressed his concern on reduction in industrial electricity consumption and uncertainty in projected figures of increase. He proposed to have a meeting with industry so that the mechanism of reference figures could be revised so that industry could in-build energy cost in their industrial output.

During discussion, Member (Technical) Sindh Rafique Ahmad Shaikh, raised his concerns on continuous system constraints which are one of the reasons for ever rising FCAs.

He made it clear that the regulator will not approve payment of withheld amount of Rs 42 billion of NTDC until it submits an investment plan.

The representative of Planning Commission also expressed his concerns at frequent unbridled positive adjustments in tariff. He suggested that the regulator should bifurcate the reasons for higher FCAs arguing that it should be clear if higher FCA was due to system constraints or other facts like fuel component.

Wajid Chattha, representative of National Power Control Centre (NPCC), the System Operator (SO), commenting on the reference fuel forecast of power sector maintained that some share of RLNG must have been made part of the reference fuel projections.

Chief law Officer for NTDC, Maria Rafique informed the Authority that NTDC has submitted its petition of release of withheld amount of Rs 42 billion, while requesting for early decision on it. She further stated NTDC’s investment plan is already with the regulator which requires a decision.

For the first time no representative from NEPRA’s Monitoring & Enforcement (M&E) Section was present in the public hearing to suggest deductions in proposed increase due to system constraints despite the fact that there were substantial interruptions in power supply in December 2023 and January 2024.

Copyright Business Recorder, 2024

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