Fuel adjustments on QTAs, FCAs: Nepra explains how positive financial impact will be reversed

ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) said on Wednesday the positive financial impact of fuel adjustments on QTAs and FCAs with respect to eight baggasse-fired IPPs will be reversed to negative after formal applications are filed by the concerned parties as per the revised understandings/agreements.

This was revealed by Muhammad Yousaf, Additional Director General (Tariff) in reply to a question raised by one of the commentators from Karachi during the public hearing held on FCA for September 2024. CPPA-G has sought negative adjustment of Paisa 70. 57 per unit to refund Rs 8.55 billion to the consumers.

However, proposed negative adjustment of Paisa 70.57 per unit will be replaced with existing positive adjustment of Paisa 86 per unit, which implies consumers will have to pay positive adjustment of Paisa15 per unit. The positive impact of requested Prior Year Adjustments was Rs 60 per unit.

August FCA: Nepra approves 86 paisa per unit negative adjustment

The commentator referred to recent news reports according to which understandings/agreements have been signed with the owners of eight bagasse-fired IPPs.

He also raised a question on PYA of about Rs 6 billion for the baggasse-fired IPPs in FCA of September 2024; and referred to the additional note of Member (Tariff and Finance), Mathar Niaz Rana on increase in tariff of baggasse IPPs to Rs 12. 4788 per unit from Rs 5.7702 per unit. “There is a proper mechanism for revision in tariff.

In 2021, a similar type of negotiation was also held with IPPs, then an application was filed with NEPRA which was processed and reduction was approved. Baggasse-IPPs related tariff petition will also be filed with the regulator, after which tariff will be re-determined and then all invoices will be revised. Then a decrease will be witnessed in tariff like the current increase is recorded,“ said Muhammad Yousaf.

Chairman NEPRA, Waseem Mukhtar who is also a member of Task Force on Energy, which is negotiating with the IPPs for revision in tariff through termination of contracts or conversion from take or pay to take and pay mode, and is aware of all related matters, remained tight lipped on the issue of baggasse IPPs as he had accorded approval of increase of 110 per cent in their tariff.

In response to Imran Shahid’s question, a representative of Jamaat-e-Islami, the representative of CPPA-G, Naveed Qaisar stated that from the date of termination of contracts of five IPPs new QTAs will be made part of tariff adjustment.

The representative of National Power Control Centre (NPCC) informed the Authority that 9.9 per cent decrease in power demand to 12, 487 Gwh has been witnessed in September 2024 against reference projections whereas 6.4 per cent decrease has been recorded on Year on Year basis. The Authority was further informed that maximum demand was recorded at 21707 MW on September 25, 2024 (in September) and minimum at 13,228 MW on September 28, 2024 whereas 22,605 MW was highest demand on September 13, 2023 and lowest 12, 434 MW on September 30, 2023.

The representative of NPCC further informed that peak hours’ pattern has changed, ie, from 6-10 PM to 12:00 to 1.00 am due to massive installation of solar system in the country. In addition, weather pattern has also impacted on consumption patterns.

Another commentator Aamir Shaikh said that industry was expecting a substantial reduction in tariff, committed at the highest level, however, though nothing has been done in this regard. He said that the issue of tariff of baggasse-IPPs must be settled early so that its impact is passed on to overburdened industry.

Citing the comments of NPCC on peak hours’ consumption pattern, he proposed that since peak hours’ consumption pattern has changed, it should formally be altered so that industry could continue its operations at 9:00-10:00 or 11:00 PM. The CPPA-G representative shared the figures of industrial tariff saying that it has been brought down to Rs 49.88 per unit inclusive of FCAs and QTAs in October from Rs 58.50 per unit in June 2024. He said next adjustment in QTA will be negligible as NEPRA has revised tariff of nuclear power plants etc. which will have negative impact of about Rs 57 billion QTA.

Due to the closure of Neelum Jhelum hydropower plant, it was informed that the production of hydroelectric power had been reduced. It was further informed that less power was generated from some coal-fired power plants that led to several questions by the power regulator including the reasons why this happened notably that less power has been generated from coal resources. However, concerned officials failed to satisfy Nepra. Chairman Nepra said that the plant has been on outage as per its schedule.

Copyright Business Recorder, 2024