ISLAMABAD: The National Electric Power Regulatory Authority (NEPRA) announced on Thursday that electricity tariffs will likely increase in the coming months due to the Quarterly Tariff Adjustments (QTAs), driven by a 20% drop in overall electricity consumption.
During a public hearing on a proposed negative adjustment of 58 paisa per unit for August 2024, concerns over the consumption decline were raised by NEPRA, the Central Power Purchasing Agency (CPPA-G), and industry representatives. Despite the adjustment, the net impact will be a reduction of only 20 paisa per unit, as a negative adjustment of 37 paisa from July 2024 will be factored in by September 2024.
Dr. Fayyaz Chaudhry, Chairman of the National Transmission and Despatch Company (NTDC), pointed to overcapacity in generation, inadequate transmission infrastructure, and uncoordinated development of power plants in the south as key reasons for the decline in consumption. He stressed the need for a comprehensive, integrated solution to the country’s electricity challenges.
The hearing also addressed a Prior Year Adjustment (PYA) of Rs 15 billion and a more than 100% increase in tariffs for bagasse-based generation to align with local coal prices. Industrialists Arif Bilwani and Aamir Shaikh argued that consumption will not rise without incentives for industries. Bilwani proposed uniform tariffs for peak and off-peak hours and special rates during holidays to encourage higher demand.
Shaikh highlighted the growing reliance of industries on cheaper alternatives like solar and high-sulfur fuel oil (HSFO), which are more affordable than electricity from the national grid. He expressed concern that the lower-than-expected negative Fuel Charge Adjustment (FCA) for August would result in higher QTAs and called for special industrial incentives.
Mathar Niaz Rana, NEPRA’s Member for Tariff and Finance, suggested that increasing electricity prices are contributing to the 20% drop in overall demand, including from industrial users. NEPRA Chairman Waseem Mukhtar acknowledged the decline in demand, raising questions about the accuracy of solar panel import data.
Member Sindh, Rafique Ahmad Shaikh, who has consistently raised concerns about falling electricity demand, attributed the reduction primarily to the closure of industrial units. He noted a 25% drop in August demand compared to projections and criticized the practice of passing on the financial burden of distribution companies’ inefficiencies to consumers. Shaikh also dismissed claims by the National Power Control Center (NPCC) that August 2024 was an unusually cool and rainy month that impacted demand.
NPCC representative Wajid Chattha presented data suggesting that weather variations played a major role in reduced consumption. Khyber-Pakhtunkhwa member Maqsood Anwar reiterated that high electricity costs are forcing industries to shut down.
