ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) approved on Tuesday Rs1.02 per unit reduction in electricity tariff of distribution companies of Wapda for next month because of a decline in fuel prices and appreciation of the rupee.
The decision was taken on the request of the Central Power Purchasing Agency after a public hearing presided over by acting chairman of Nepra Khwaja Mohammad Naeem. The reduced rates would not apply to K-Electric and lifeline consumers of the distribution companies of Wapda.
Under the monthly fuel adjustment mechanism, the regulator is required to revise consumer tariff every month on the basis of fuel cost of power generation depending on fuel mix, exchange rate and fuel prices.
The petitioner told the regulator that the fuel cost of power generation significantly fell in March because of a decline in furnace oil prices in the international market, exchange rate appreciation and lower fixed cost payments to independent power producers owing to depreciation of the dollar against rupee.
It said though hydropower generation was lower in March this year than in the same month last year, the impact of furnace oil price reduction alone provided about Rs7 billion saving to power generation companies.
As a result, the fuel component of power generation in March amounted to Rs8.9 per unit with reference fuel charges of Rs9.92 per unit for distribution companies of Wapda registering a reduction of Rs1.018 per unit which should be passed on to consumers under monthly fuel adjustment mechanism.
Some participants objected to the approval process, saying that the regulator had not given enough time to interveners to contribute to the hearing as required under Nepra rules. They said Nepra Rule 6 (3) required the regulator to give at least seven days to a stakeholder to become part of the hearing but its advertisement about the CPPA request was published on April 19 and the public hearing was held on 22.
This meant that the stakeholders were given only three days to participate in the public hearing and that too on the weekend, practically giving them no time to prepare for the hearing, they said.
A representative of the Sui Southern Gas Company said its team did not get adequate time to contribute to the public hearing. But the objections were overruled by the regulator.
The acting chairman of Nepra said the upfront tariff allowed by the regulator for bagasse-based power plants was so attractive for sugar mills that sugar would become their by-product. He said two bagasse-based co-generation plants of 26MW each were likely to start power generation in May and June.
He said 1500MW to 1800MW of electricity would be provided by sugar mills over the next two years. The 30-year levelised tariff for bagasse-based plants has been set at about Rs11 per unit at exchange rate of Rs98 to a dollar.