Base electricity tariff likely to go up by Rs5 per unit

Source: The Nation

ISLAMABAD - The base electricity tariff is likely to go up by upto Rs 5 per unit as Central Power Purchasing Agency (CPPA) has submitted the projected power purchase for the Financial Year (FY) 2024-25.

In its petition, submitted on behalf of DISCOs, the total power purchase price for the next fiscal has been projected to be up Rs 3.58 trillion, which is approximately Rs 310 billion higher than existing PPP cost of Rs 3.28 trillion. CPPA-G has submitted Projected Power Purchase Price report for the FY 2024-25, under seven scenarios for consideration of the Authority, in order to determine the consumer-end tariff for FY 2024-25.

The scenarios are based on various level of demand growth ( 3pc to 5pc), exchange rate(Rupee value at 275 and 300) and hydrology of normal and dry season. The CPPA projection suggests that electricity consumers will bear 2.40 percent of the US inflation, which is proposed to be incorporated into the tariff, 12.20 percent of domestic inflation, interest charge of 21.37 percent and 5.31 percent, respectively, on electricity purchases, and market operator fee of Rs 3.48 per unit.

Similarly, fuel cost of Rs 8.61 per unit to 9.34 per unit has been proposed under various scenarios, capacity charges from 15.49 per unit to Rs 17.42 per unit are also projected for 2024-25.

It is worth to mention here that during the ongoing fiscal year the capacity payments was 71 percent of the PPP, whereas energy cost was around 29% of the total projected PPP. The capacity charges for 2023-24 was Rs.16.22 per unit, whereas energy charges are Rs.6.73 per unit.

The total power purchase price for the next fiscal has been projected to be from Rs 337 billion to Rs 358 billion under various scenarios.

The total Power Purchase Price under seven scenarios has been projected from Rs 25.03 per unit to Rs 27.11 per unit for the next fiscal year. Notably, the PPP for the ongoing FY 2023-24 is Rs 22.95 per unit.

The capacity charges works out as around 64% of the total projected PPP of XWDISCOs, whereas energy cost is around 34 % of the total projected PPP. On account of variable O&M cost the CPPA has projected Rs 0.48 per unit and Rs 0.50 per unit on account of seven different scenarios.

The increase in PPP has been projected from Rs 2.07 per unit Rs 4.16 per unit, under various scenarios. Besides, the PPP, the base tariff also includes distribution margin XWDiscos, transmission and distribution losses. The distribution margins of XWDiscos for the ongoing Fiscal year is Rs 3.10 per unit which is also likely to go up by 15 to 20 percent.

To ensure a fair and informed decision, NEPRA has scheduled a hearing for May 23, 2024. However, if approved, consumers of DISCOs could face a staggering additional financial strain of Rs 3.37 trillion to Rs 3.58 trillion in the upcoming fiscal year (2024-25).

The increase in PPP and distribution margin of XWDiscos will take the current average end consumers prices from Rs 29.78 per unit to approximately Rs 35 per unit.

Meanwhile, Federal Minister for power Division Awais Leghari on Wednesday ruled out any plans of the government to impose taxation on the solar net metering. The government will not withdraw its regulations related to net metering for the already installed solar systems, he told a local television channel.

However, the minister said, the matter could come under consideration in next few years as the net metering could lead to fiscal losses and increase in circular debt.

Net metering is a billing tool that allows the consumers to send excess energy generated by solar panels to the local grid in exchange of credits to the monthly electric bills.

Leghari mentioned that capacity payments were a big challenge for the government and said reforms had been chalked out to bring improvement in the transmission system in next four years. He urged the general public to resort to solar power to reduce load on system of power generation.

The minister said steps were being taken to improve customer care at distribution companies, check power theft and ensure crackdown against pilferage. He vowed ensuring zero tolerance against service delivery. Leghari also hinted at privatization of departments, for which, he said longterm agreements for award of operational management contracts were in pipeline. This way, the privatization can be carried out after value-addition, he added.