Power companies seek Rs1.20 per unit increase in fuel cost for consumers in August

Power companies in Pakistan are seeking a Rs1.20 per unit hike in fuel cost charges for consumers in August. This request, filed by the Central Power Purchasing Agency (CPPA), aims to recover an additional Rs15.7 billion through consumer bills. The primary driver for this proposed increase is the increased reliance on expensive imported fuels, particularly Regasified Liquefied Natural Gas (RLNG).

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Power companies on Friday sought a Rs1.20 per unit increase in fuel cost charges for consumers across the country in August, primarily due to the use of expensive imported fuels.

The CPPA's petition highlights that the actual fuel cost in June stood at Rs8.90 per unit, exceeding the reference cost of Rs7.714 per unit. This necessitates the additional charge to consumers. The situation is exacerbated by the nearly doubled price of RLNG, which reached Rs35 per unit compared to Rs16 per unit in June of the previous year. The utilization of furnace oil and diesel-based plants, though contributing less than 1% to the overall grid supply, also added to the higher fuel costs, with fuel costs at Rs52 per unit for furnace oil and Rs57 per unit for diesel.

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The request comes despite around 75pc of electricity generated in June having come from cheaper domestic sources, predominantly those with zero fuel costs.

This proposed increase comes despite a significant portion of electricity generation in June originating from cheaper domestic sources. Hydropower contributed 39% to the supply, followed by local coal (10%), local gas (6.5%), and nuclear power (13.5%). Wind projects added 5%, solar 0.82%, and bagasse-based generation 0.35%. The fuel cost for local coal was Rs11.5 per unit, and for local gas, it was Rs13.7 per unit, both considerably lower than imported alternatives. Nuclear power's fuel cost was the lowest at Rs2.85 per unit.

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Once approved, the power companies would charge consumers of all power utilities, including ex-Wapda Distribution Companies (Discos) and K-Electric, an additional Rs15.7 billion through August bills.

The National Electric Power Regulatory Authority (Nepra) has scheduled a public hearing for July 29 to scrutinize the request. The CPPA noted a slight decrease in power consumption in June compared to the previous year, with 13,066 million units consumed this year versus 13,310 million units last year. The recent increase in RLNG prices, notified by the Oil and Gas Regulatory Authority (Ogra), further contributes to the rising fuel costs, driven by international market purchases amid supply disruptions.

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The National Electric Power Regulatory Authority (Nepra) has called a public hearing on July 29 to examine the request for a fuel cost adjustment (FCA).