ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) on Thursday advised the government to review electricity tariff structure to improve business activities in the country.

This advice came from the Power Regulator during a public hearing on FCA adjustment request of CPPA-G for the month of February 2024, after threadbare discussion on reasons behind higher tariff, higher FCAs, lower electricity demand due to lesser growth in industrial sector, unjustifiable fuel mix and system constraints.

Chief Executive Officer (CEO), CPPA-G Rihan Akhtar confirmed to the Authority that in fact growth in electricity demand was negative 12.2 per cent in February 2024 due to current situation of the country, besides other factors. He explained reasons for increase or decrease in use of different fuels especially RLNG to run the system keeping in view its stability. The prices of RLNG were higher as compared to local coal and imported coal. He confirmed that prices of LNG, imported coal and local coal were the same as taken in the reference prices. He further revealed that presently Rs 7.06/kWh is in the field for the month of January 2024 whereas the requested positive adjustment is Rs 4.99/kWh for February 2024, which will be Rs 2.06/kWh on the lower side with respect to consumer reference. This will be charged in the month of April 2024.

IMF and the power tariff

As CEO CPPA-G completed his presentation, Rafique Ahmad Shaikh, Member (Technical) NEPRA), hurled a volley of questions towards Power Division, CPPA-G, NTDC and NPCC, saying that the government side has stopped hearing the Regulator.

“You (Power Division and CPPA-G) have stopped hearing us. What we advised in the past is neither being implemented by the Power Division nor CPPA-G. The Power Division and its agencies turn a deaf ear to the directives of the Authority. A very meagre analysis of monthly FCAs is not being shared with the Regulator,” Rafique Shaikh added.

He shared statistics of growth in electricity consumption in October 2022 and February 2023 and the same months in the current year, according to which consumption was substantially on the lower side due to less demand in the country due to a variety of reasons. “Growth in consumption is decreasing due to economic conditions prevailing in the county but measures can be taken by relaxing commercial base load shedding,” he stated adding that that Power Division and its Agencies should consider lifting ban on revenue based load shedding, as this measure may increase electricity consumption in the country.

Mathar Niaz Rana, Member (Tariff and Finance) stated that the cumulative impact of FCA of February 2024 and capacity payment will be more than Rs 7/kWh, raising questions as to how industry can bear this huge variation in tariff. He said, this is a very alarming situation and proposed that there should be an internal meeting to review benchmarks of fuel component as compared to international benchmarks.

“What benchmarks are being missed by out power industry. Financial cost of inventory and extension in debt duration is also required to be reviewed without altering the original agreements with power producers. Why is our capacity component far higher than in other countries? Survival of power plants is linked to power industry of a country,” he added. Nepra directed Power Division and its attached entries to submit a report explaining sector-wise reduction in demand.

Chairman Nepra, in his remarks said that there is a need for restructuring of tariff to increase electricity demand. Presently, the government is extending subsidy of Rs 592 billion to consumers using less than 400 units per month. He advised the government to review tariff structure to increase business activities in the country.

Copyright Business Recorder, 2024

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