ISLAMABAD: The Power Division is to file a motion to the National Electric Power Regulatory Authority (Nepra) to stagger the impact of Fuel Charge Adjustment (FCA) as per approval of federal government, well informed sources told Business Recorder.
Fuel Charge Adjustment is determined by the Nepra as per section 31 (7) of the NEPRA Act on monthly basis. As per the existing tariff methodology, power purchase price billed to consumers is subject to adjustment on account of variation in fuel cost on monthly basis and be reflected uniformly in the consumers’ monthly bill as FCA with a lag of two months.
According to sources, there has been an unprecedented trend of escalation in fuel prices in the international market leading to exceptionally high FCAs for the consumers during the current year. Major reason behind fuel price increase is due to rising energy prices. For instance, the rates of RFO, RLNG and coal have surpassed Rs. 172,000/M Ton, Rs. 4,000/mmbtu and Rs. 65,000/M Ton in recent months as compared to Rs. 76,000/ M Ton, Rs. 1.600/mmbtu and Rs. 20,000/M Ton respectively last year.
Pursuant to this, the Nepra has determined the FCA of Rs 9.90/unit for the month of June 2022 to be charged in the billing month of August 2022 for Discos. Similarly, for K-Electric consumers, NEPRA has determined Rs. 9.90 per unit of FCA be charged in August 22 billing cycle (Rs. 6.9/unit of May-22 and Rs. 3/unit ofJune-22).
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Further, the uniform tariff determined by the Nepra and recommended by it as “final tariff” for notification in the official gazette has also been notified by the Federal Government by passing on Rs 3.5/unit in July 2022 and Rs 3.5/unit in August 2022. As fate would have it, consumers have been hit by Rs 9.90 per unit of FCA plus Rs 7 per unit of rebasing delta in August billing. This is an average increase of Rs 16 per unit over and above the July rates. The sources further stated that adjustments in tariff have significantly increased the electricity bills for the month ofAugust2022. Moreover, the flood situation caused by abnormally heavy monsoon rains has also affected the consumers across the country, especially agriculture which is the most flood affected sector.
Power Division argues that keeping in view the existing position and to save the recovery ratio and the hard-won rebasing gains, FCA staggering was an obvious option to ease out consumers without losing annual revenue targets.
Prime Minister Shahbaz Sharif held a series of meetings with Power and Finance Divisions and directed to propose an intervention to provide immediate relief measures to poorer consumers in respect of FCA. Power Division prepared a draft proposal for providing relief to private agriculture consumers and lower-income domestic consumers which was agreed and announced by the Prime Minister in his media talk on August 23, 2022 for immediate application.
During this whole process, Finance Division has been part of the consultation to decide on possible relief to be passed on to the consumers and for meeting the immediate cash requirements through bridge-financing.
Since the Prime Minister has already announced the staggering of FCA and the Power Division has issued the instruction for implementation to Discos and K-Electric on August 24, 2022, therefore the proposal of staggering of FCA needs post facto approval of the Cabinet, enabling the Power Division to file the motion before the Nepra.
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