The National Electric Power Regulatory Authority (NEPRA) has increased the electricity tariff by Rs. 7.90 per unit for May 2022 as part of the fuel price adjustment (FPA).
Under the fuel price adjustment, the Central Power Purchasing Agency (CPPA) requested an increase in the electricity tariff of Rs. 7.96 per unit for May. Tousif H Farooqi, Chairman of NEPRA, presided over the hearing on the CPPA application. Other NEPRA members also attended the hearing.
During the hearing, NEPRA was informed that the international market prices for fuel coal and LNG had risen. Within a year, the price of LNG in the international market increased from $8 to $42, and the LNG is no longer available for spot purchase. Due to the high cost of imported fuel, it is critical to increase the use of domestic coal for power generation, according to CPPA officials.
Chairman NEPRA enquired as to the reason for such a large increase, given that less expensive fuel was used in May. The Chairman stated that two years ago, the NEPRA attempted to grant a tariff of Rs. 7 per unit to some renewable energy projects, but the CPPA objected, claiming that there is already a capacity trap and that no more electricity should be generated. If the CPPA had not opposed those projects, cheap renewable energy would have been available in the country today, according to Chairman NEPRA.
In response to the chairman, CPPA officials stated that no one knows what will happen in two years. Rafiq Shaikh, Member NEPRA Sindh, stated on the occasion that bad governance is the real problem in the power sector that needs to be addressed.
The chairman of NEPRA responded that the authority is unable to provide relief to consumers due to the high cost of imported fuel. “There are only two options: load shedding or generating expensive electricity,” NEPRA Chairman said. He went on to say that only green fuel makes cheap electricity possible.
According to preliminary NEPRA calculations, the fuel price adjustment for May 2022 will be Rs. 7.90, which will be added to the bill for July 2022. According to estimates, electricity customers will pay an extra Rs. 113 billion in one month. This increase will only be in effect for one month. This increase will not be applicable to K-Electric and lifeline customers.