Get ready to face another bomb of bijly as power companies seek massive increase in tariff

ISLAMABAD: The Ex-WAPDA distribution companies (XWDiscos) have submitted a fresh request to the National Electric Power Regulatory Authority (Nepra) for a substantial increase of Rs 7.13 per unit for March 2024.

This plea to Nepra comes amidst a significant decrease in hydropower production and systemic challenges such as the incapacity of the high voltage direct current (HVDC) transmission line to efficiently transport economically viable power from southern producers to the north. It will cause a considerable additional financial strain on power consumers.

Consequently, fewer cost-effective energy sources have been utilized in the south for power generation, leading to a reliance on expensive alternatives like high-speed diesel and residual fuel oil (RFO).

One of the primary drivers behind these elevated costs is the surge in fuel expenses.

Nepra has slated a public hearing on February 23 to examine the petition submitted by the Central Power Purchasing Agency (CPPA) on behalf of Discos.

It’s noteworthy that these companies are also seeking to recover Rs 2.568 billion from past adjustments as part of the total demand.

The petition reveals that in January 2024, a total of 8,314 gigawatt-hours (GWh) of electricity were generated at a cost of Rs 114.634 billion (equivalent to Rs 13.7885 per unit). Of this, 7,938 GWh, originally valued at Rs 116.06 billion, was delivered to distribution companies (Discos), while transmission losses accounted for 4.24% (or 352 GWh) of the total generation.

This loss percentage is higher compared to the previous month (Dec 2023), which stood at 3.51% (271 GWh), and January 2023, which was also 3.51% (or 298 GWh).

Power generation in January 2024 witnessed a decline of 2.4% compared to the same month in the previous year when 8,515 GWh were generated.

However, there was a notable increase of 7.6% in generation in December 2023. Interestingly, actual power generation during that month was 4.7% lower than the reference generation, which is expected to result in increased capacity charges for the third quarter of fiscal year 2024.

The petition further indicates a worrying 43.9% increase in generation costs to Rs 13.79 per unit year-on-year in January 2024 from Rs 11.2 per unit in December 2023. Similarly, compared to the previous month (Dec 2023, unit cost of Rs 10.13), this represented an increase of 41.3%.

The per-unit power generation cost from imported coal surged by 22% in January 2024 to Rs 21.05/unit from Rs 17.25/unit in the previous month. However, the cost of locally sourced coal fell by 3.3% to Rs 11.9/unit from Rs 12.33/unit in December 2023.

Expensive generation primarily stemmed from RFO and diesel. RFO-based generation in January reached 750 GWh, marking a 62% increase over the same period last year and a 346% increase over the previous month (168 GWh). Its per-unit generation cost was Rs 35.44/unit, representing a 22.3% increase compared to the same month of the previous year.

Meanwhile, generation from HSD amounted to 102 GWh at Rs 45.61/unit. Notably, in the previous month, this expensive source was not utilized for power generation; however, only 5.4 GWh was generated in the same month of the previous year.

The petition underscores that in January, consumers were charged a reference fuel cost of Rs 7.4894 per unit, while the actual fuel cost incurred was Rs 14.6202 per unit. The CPPA contends that the additional cost burden of Rs 7.1308 per unit should be passed on to consumers.