Islamabad: The Power Division and industrial representatives have called for petroleum levies on furnace oil and diesel used for electricity generation to be reduced or removed, as power companies seek permission to recover Rs 32.76 billion from consumers.
The demand emerged during a National Electric Power Regulatory Authority (NEPRA) hearing on Thursday over a proposed Rs 2.56 per unit fuel cost adjustment for electricity consumed in September. The Central Power Purchasing Agency (CPPA) has requested that the amount be collected through November bills. The proposal remains subject to NEPRA's decision.
A fuel cost adjustment covers the difference between the fuel cost included in electricity tariffs and the actual cost incurred during the relevant month.
CPPA representative Rehan Akhtar said September’s actual fuel cost stood at Rs 10.022 per unit against a reference rate of Rs 7.46. He attributed the difference mainly to changes in generation sources and the higher cost of alternative fuels.
Akhtar said the increase compared with October’s fuel adjustment would not exceed Rs 1.45 per unit, because the existing positive adjustment would expire and be replaced by the proposed Rs 2.56 charge.
Industrial representatives said the government was collecting approximately Rs 76000 per tonne in petroleum levy on furnace oil and Rs 80 per litre on diesel used for power generation. They argued that removing the levies could bring generation costs of around Rs 62 per unit down to Rs44 to 50.
Officials from entities under the Power Division said furnace oil and diesel accounted for 3.6 percent of September’s electricity generation because liquefied natural gas (LNG) and other cheaper sources were unavailable.
Naveed Qaiser, chief financial officer of the Power Planning and Monitoring Company, agreed that the levies substantially affected generation costs. He said the Power Division had been seeking their removal or reduction at government forums.
Qaiser said tariff reduction remained a government priority, particularly for industry. He said previous efforts had reduced tariffs by around Rs 10 per unit for consumers generally and up to Rs 18 per unit for industrial users.
Industrial representatives also demanded the suspension of the surplus incremental electricity package, saying its continuation imposed an additional burden of around Rs 11 per unit on grid consumers.
Questions over data and coal purchases
NEPRA officials and industrial representatives questioned discrepancies in CPPA’s generation data and sought greater transparency. They also challenged a previous Rs 16 billion adjustment relating to LNG prices, arguing that timely reporting could have reduced the proposed additional recovery.
Industrial representatives separately alleged that the Port Qasim power plant was purchasing coal through affiliated entities at prices above those paid by other plants. They sought an investigation, including by the National Accountability Bureau (NAB).
NEPRA said it would allow only justified coal costs and that the producer would have to absorb any disallowed amount.
Government entities reported a 6.5 percent increase in overall electricity demand in September, including a 6.7 percent rise in industrial consumption. Industry representatives said the industrial increase reflected businesses shifting from their own generation to the national grid rather than the effect of the incremental package.
Average fuel costs rose by almost 37.5 percent compared with September last year, as reduced LNG supplies amid the regional conflict increased reliance on expensive alternative fuels and imported coal.
CPPA data showed diesel based generation reached 213 gigawatt hours (GWh), or about 1.6 percent of grid supply, at Rs 62.14 per unit. In August, diesel produced 80GWh at Rs 54 per unit.
Furnace oil based generation fell to 263GWh from 321GWh in August, while its cost declined to Rs 44.86 per unit from around Rs 46. Its share of generation remained close to two per cent.
