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Ever since the latest IMF programme, electricity tariff periodic adjustments have been happening without delay. Periodic quarterly adjustment pertaining to 1QFY20 was decided by Nepra earlier this week, where upwards adjustments to the tune of Rs14.7 billion were made, as against the request for Rs17.2 billion. This is the lowest quarterly upwards adjustment in last few rounds of periodic adjustments, showing why timely adjustments are always helpful.

The heaviest adjustment happened on account of 1HFY19, with a uniform increase of Rs1.49 per unit. That excludes the adjustment of Rs2 per unit on account of previous year 2018, as power tariffs were not disturbed, and al appeals to make periodic adjustments were not entertained, in the last few years of the previous government.

On account of periodic quarterly adjustments only, the uninformed tariff has gone up by Rs1.97 per unit in 2019 – constituting five quarters leading to 1QFY20. In value terms, this amounts to an upwards adjustment of Rs205 billion almost 20 percent to the national average base tariff. If the interim adjustment on account of distribution margins made in September 2019 is also included, the total adjustments this year go as high as Rs2.17 per unit or Rs225 billion. The monthly tariff adjustment in lieu of FCA is altogether another story, and that has added Re1 per unit on average to the final tariffs, every month.

From here on, one hopes that the periodic quarterly adjustments would not be on the extreme high side, as the capacity payment component seems to have been built well in the base tariffs.

All eyes will now be on the full year tariff notification by Nepra for FY20, as the Central Power Purchasing Authority (CPPA) has submitted a detailed report, as regards the power purchase price, for each disco, in good detail. A cursory look tells the average PPP would hover around Rs 11.5 per unit, which is 15 percent higher from the PPP for FY18. And also seems to be based on lofty demand projections and surprisingly low rupee dollar assumption of 150/USD. From the first look at the CPPA report, another tough bullet to bite is just around the corner. That said, the adjustment from now on, if continue to be mad timely, would be much smaller than the ones faced in 2019. With the tariff affairs firmly in place, it would not hurt if the focus now shifts towards transmission, distribution, and governance side of affairs.