Discos look for Rs10bn more despite cheaper generation in March

ISLAMABAD: Despite over 63 per cent power generation from domestic cheaper fuels and unprecedented increase in base tariff in recent months, the ex-Wapda distribution companies (Discos) have moved to charge about Rs10 billion in additional fuel cost to their consumers at the rate of Rs1.174 per unit in May.

The National Electric Power Regulatory Authority (Nepra) has accepted the tariff petition filed by the Central Power Purchasing Agency (CPPA) on behalf of the Discos and has called a public hearing on May 3 to see if the proposed increase in tariff is justified in line with monthly fuel cost adjustment (FCA) mechanism.

On approval, the Discos would charge an additional amount of about Rs9.93bn from their consumers for electricity consumed in March despite a healthy 63.5pc contribution from domestic cheaper fuels.

The increase in FCA is despite the base average tariff has gone up by more than Rs7 per unit besides a series of surcharges and a reduction in the cost of import fuels like furnace oil and liquefied natural gas.

National grid received bulk of power from hydel and nuclear sources

The biggest contribution to the overall national power grid came from hydropower and nuclear generation at 22.90pc each in March. The hydropower generation was relatively lower in March this year when compared to 26.46pc in February. Likewise, nuclear power share was also on the lower side when compared to 24.28pc in February. Hydropower has no fuel cost while nuclear fuel cost is just Rs1.08 per unit.

The third largest generation share in the national power grid came from LNG-based electricity at 20.42pc in March when compared to 18.86pc in February. This was followed by a 15.3pc share from coal power plants in March when compared to 14.07pc in February. Power supply from domestic natural gas slightly improved to 12.66pc in March when compared to 11pc in February.

Interestingly, the fuel cost of furnace oil-based power generation at Rs21.27 per unit was lower than Rs24.31 per unit of RLNG-based power production. However, the authorities produced just 0.46pc share from furnace oil compared to 20.42pc from LNG.

The CPPA claimed on behalf of Discos that the consumers were charged a reference fuel cost of Rs8.22 per unit in March but the actual cost turned out to be Rs9.89 per unit, hence an additional charge of Rs1.174 per unit.

The cost of power generation from domestic gas slightly went up to Rs11.26 per unit in March compared to Rs10.07 per unit in February and Rs10.5 per unit in December 2022. The furnace oil-based power generation cost stood at almost Rs21.27 per unit significantly down from Rs34 per unit a few months earlier mainly because of a decline in international oil prices.

Coal-based power generation cost, on the other hand, dropped significantly to Rs8.68 per unit in March when compared to Rs12.57 per unit in February and Rs11.5 per unit in December 2022.

Three renewable energy sources — wind, bagasse and solar — together contributed about 5pc to the national grid in March, up from 3.54 pc in February and about 4.54pc in January this year. Wind and solar have no fuel cost, while that of bagasse has been calculated at Rs5.98 per unit in March compared to Rs5.35 per unit in February.

The CPPA said claimed that the generation units produced about 8,741 Gigawatt hours at an average fuel cost of Rs71.83bn and about 8,459GWh were delivered to Discos at an estimated average fuel cost of Rs83.63bn at a rate of Rs9.89 per unit.

Published in Dawn, April 27th, 2023

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