The government on Friday informed the National Assembly that fuel price was not the only factor affecting the electricity cost and other factors, including exchange rate fluctuations, variations in generation from hydel, gas, diesel and nuclear, also contributed to the increase.
In a written reply to the National Assembly, the Minister in-charge of the Cabinet Division stated that a major component of the generation expenditure was the fuel cost, which was dependent on international oil prices and exchange rate variations.
Other factors affecting the power purchase price included: (i) generation mix, which meant the share of source of electricity and increasing share of imported oil-based generation was the major cause of increase in electricity price; (ii) price of oil in the international market and; (iii) value of Pakistan rupee against US$ (devaluation of rupee are important factors for keeping the cost of imported oil up despite the decline of oil prices in the international market).
The Minister for Cabinet Division stated that the per unit rate, if the price of oil was $100 per barrel in the international market, will be Rs 1.8715/kWh. To cater for the variation, National Electric Power Regulatory Authority (Nepra) made monthly fuel price adjustment to fulfill its responsibility.
Nepra, based on best estimates of electricity produced through various sources ie hydel, thermal (oil, gas, coal), nuclear as well as fuel prices in the international market, determined a reference per unit cost of electricity generation for the next year in advance.
The government also informed the House that the Central Power Purchasing Agency (CPPA) within NTDC submits the actual cost incurred for generation of electricity on the basis of rates determined by Nepra which were subsequently advertised in the media. The hearing schedule was also advertised for participation of general public and representatives of NTDC, CPPA, WPPO, Ministries of Water and Power and Finance.
Nepra, after due diligence, compared the actual cost incurred on electricity generation during a particular month with Nepra''s reference cost for the corresponding month, and accordingly determine a Fuel Surcharge Adjustment (FSA), which was applicable after gazette notification.
The Minister In-charge also maintained that the monthly variation in electricity price, did not have any cumulative effect, instead it affected the consumer-end of electricity tariff only for a particular month under a separate head of FSA. "The generation cost is nearly more than 85% of the average consumer-end tariff," he said.