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The state-owned power distribution companies have sought Rs46.9 billion on account of the quarterly tariff adjustments for 4QFY24, – similar to the periodic adjustments allowed for the previous quarter. The determination is likely to go into effect from September 2024, given that the existing adjustment lapses at the end of August. Recall the QTA for 3QFY24 slates Rs1.9/unit was collected in June (over and above the then prevailing adjustment of Rs2.74/unit), while Rs0.93/unit in July and August.

The adjustment of Rs46.9 billion likely to be collected over the next three months starting from September, could well translate close to Rs1.5/unit – a 60 percent increase over the current QTA. Mind you, the prevailing QTA is based on projected sales of 38 billion units (excluding lifeline consumers) between June and August 2024. Actual sales are expected to fall short by 10 percent, and the deviation is reflected in the current adjustment cycle.

And sales from the national grid have been a big problem of late, with almost every other disco reporting a significant decline across categories. The core reason for 4QFY24 QTA lies in a significant deviation between actual and reference consumption, as sales from January to March stayed nearly 9 percent lower than the consumption referenced in the Power Purchase Price base tariff assumptions.

Capacity charges constitute the bulk of periodic adjustment, with nearly half the share at Rs23 billion out of Rs47 billion. However, the composition has been gradually shifting in the recent past. Not long ago, almost the entire periodic adjustment was made up of capacity charge component, an average of 5 percent for the best part of the last four years.

With mounting bills, distribution losses have turned for the worse, both in absolute and reference terms. As a result, a staggering one-fourth of the adjustment in 4QFY24 pertains to the impact of transmission and distribution losses. On top of it, demand from the grid, especially from the industrial sector is struggling to bounce back, leading to higher capacity adjustments to be made quarter after quarter. A detailed disco-wise breakdown for 4QFY24 is yet to be revealed, but if last quarter was any guide, industrial demand is expected to have led the route – from all but one major industrial cluster.

That said, FY25 should witness a more modest round of periodic adjustments, largely because the reference base tariffs are built on much more realistic grounds. The tariffs are still painfully high for most consumer categories, and demand resurrection does not look imminent, which would keep periodic adjustment in the positive zone, albeit, at a lower magnitude.

Comments

200 characters
KU Aug 26, 2024 11:34am
People cannot survive IPPs costly energy nor country afford to subsidies it by loans. Emergency intervention required on alternate energy/speed up dams for affordable energy, water for agriculture.
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Builder Aug 26, 2024 12:16pm
Have been saying it all along - why such high tariff adjustment after revision of baseline tariff to new highs?
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Builder Aug 27, 2024 12:22pm
Quite interestingly, they have increased baseline tariff of three-phase customers by about Rs. 4 in Punjab while providing subsidy to those in 200-500 units range. How's it subsidy then?
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Abdul Moiz Adhi Aug 29, 2024 12:18am
Dear, ye adjustment k messages k ilawa Kuch aur bhi Bata dya kren.
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