PIAF calls for reversing decision as NEPRA again raises Discos tariff under FCA

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PIAF

ISLAMABAD, /DNA/ – While criticizing the government’s decision to make another raise in electricity tariff, the PIAF Chairman Faheemur Rehman Saigol on Sunday urged the National Electric Power Regulatory Authority (NEPRA) to reverse the proposed jump in power charges, as it has increased tariff of power Distribution Companies (DISCOS) by Rs3 per unit for Oct 2023 to recover Rs32 billion from consumers under monthly Fuel Charges Adjustment (FCA) mechanism.

In a statement issued here on Sunday, the PIAF Chairman said the government’s decision to increase the electricity tariff is anti-industry, and the PIAF strongly condemns the government’s move and calls on it to rescind it. He urged the power ministry to identify system constraints and communicate targets to all concerned departments in order to launch a wartime effort to upgrade the transmission system.

It is to be noted that the Authority conducted the hearing in the matter on November 29, 2023, wherein the data submitted by the CPPA-G came under scrutiny. According to reports, the Nepra reviewed the request by CPPA-G seeking monthly FCA and due diligence was done accordingly. From perusal of the information so provided by CPPA-G, the actual pool fuel cost for the month of October 2023, as claimed by CPPA-G, is Rs.11.4277/kWh, against the reference fuel cost component of Rs.7.8938/kWh. The actual fuel charges, as claimed by CPPA-G, for the month of October 2023 increased by Rs.3.5339/kWh as compared to the reference fuel charges.

CPPA-G is directed to develop a proper mechanism for Inter DISCO settlement of FCA worked for each XWDISCOs and the FCA charged from consumers after consultation with DISCOS, in order to ensure proper accounting of energy and cost of each DISCO as per their own basket.

The Nepra, after incorporating the adjustments, has reviewed and assessed a National Average Uniform increase of Rs.3.0786/kWh in the applicable tariff for Discos on account of variations in the fuel charges for the month of October 2023 i.e. Actual National Average Uniform Fuel Charge Component for October 2023 for Discos consumers was Rs10.9724 per unit against corresponding FCA of Rs7.9838 / kWh, showing a difference of Rs3.0786/ kWh.

The positive adjustment shall be applicable to all the consumer categories except Electric Vehicle Charging Stations and lifeline consumers. It shall be shown separately in the consumers’ bills on the basis of units billed to the consumers in the month of October 2023. Discos shall reflect the fuel charges adjustment in respect of October 2023 in the billing month of December 2023.

Faheem Saigol said that it is unfortunate that the National Electric Power Regulatory Authority (NEPRA) has accorded final approval for another raise in electricity rates for industry, commercial sector, agriculture tube-wells, public lighting and other categories of consumers.

Faheem Saigol said that the further increase in rate of electricity is also part of pact signed between government and International Monetary Fund, which says that the government has to notify NEPRA’s determinations without any delay and amendment.

On July 14, 2023, the NEPRA approved average rebasing in tariff of Rs4.96 per unit across the board but the government, after intensive consultation, decided to pass more financial impact of proposed increase to unprotected domestic consumers and other categories through cross subsidisation to protected category of domestic consumers and adjustment of Rs148 billion subsidy. He argued that this is a big blow to electricity-heavy industries, if not passed on to the consumers. It could also affect the businesses, who are reliant on grid. Roughly this could mean over Rs50/bag impact if their goods are produced using grid. He said that Pakistan’s industry had been harmed by the high cost of doing business, which discouraged investment in capacity and capability and called for easing the burden of heavy taxes on the power sector. He said that the high cost of doing business has proved to be dangerous for Pakistan’s industry, discouraging investment both in capacity and capability, calling for lessening the burden of heavy taxes on the power sector.