ISLAMABAD: In a clarification issued on Thursday, the National Electric Power Regulatory Authority (Nepra) addressed a recently published news item titled “Bagasse-Fired IPPs: NEPRA Set to Approve 60% Hike in FCC”, stating that the write-up contains several inaccuracies and misrepresentations regarding the proceedings and determinations made during the related hearing.
According to Nepra’s clarification, the headline of the news item is misleading and contradicts the factual record. Contrary to the claim of a 60% increase in the Fuel Cost Component (FCC), Nepra clarified that there is actually a reduction of approximately 21%—equivalent to Rs 2.6069 per unit—with the FCC revised from Rs 12.4788 to Rs 9.8719 per unit.
The clarification has further stated that the news item incorrectly cited the existing FCC as Rs 5.9822 per unit. However, the correct FCC—duly notified via SRO 1537(I)/2024 dated September 19, 2024—is Rs 12.4788 per unit. NEPRA pointed out that the news item itself contradicts its own headline by stating later in the text: “FCC has been reduced by Rs 2.6069 per unit from existing Rs 12.4788 to Rs 9.8719 per unit.”
Nepra has also rejected news reporter’s claim that “consumers have to bear the brunt of rupee devaluation by 30%, whereas 70% is to be adjusted by bagasse-fired IPPs.” According to Nepra, this assertion is factually inaccurate. Under the previous arrangement, 100% of the foreign O&M indexation due to rupee devaluation was passed on to consumers. Under the revised terms, however, only 70% will be transferred to consumers, while the remaining 30% will be absorbed by power producers—providing meaningful relief to end-users.
In addition, Nepra refuted the news item’s claim that “NEPRA has increased the purchase price of power from bagasse IPPs to Rs 14/unit with fuel cost of almost Rs 10/unit.” On the contrary, Nepra stated that a reduction of Rs 3.0752 per unit was presented during the hearing. The cumulative expected savings across all bagasse-fired projects are estimated at around Rs 235 billion over the project lifecycles, with further savings expected in the future due to reduced O&M and insurance components, especially during periods of high inflation and rupee devaluation.
Rejoinder by news reporter:
Nepra’s clarification indicates that the regulator did not carefully review the publicly available documents presented during the hearing or the Fuel Charges Adjustment (FCA) claim for March.
The hearing documentation clearly shows the FCC is revised to Rs 9.8719 per unit under the revised agreements. However, the March FCA request submitted by bagasse-fired IPPs lists the FCC at Rs 5.9822 per unit. This indicates a clear upward revision in the FCC—amounting to a 60% increase—contrary to Nepra’s claim.
Regarding the rupee devaluation mechanism, the statement that consumers will bear 30% of the burden while 70% will be absorbed by the IPPs is correct. However, in the case of rupee appreciation, the benefit would be passed on to the IPPs—not the consumers.
There were noticeable voice disruptions during the Nepra hearing due to technical issues, which may have led to misinterpretation/misunderstanding. However, the news reporter stands by his story.
Copyright Business Recorder, 2025
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