ISLAMABAD: The Power Division on Thursday projected a Rs2.56 per unit increase in November bills for electricity consumers on account of fuel cost adjustment (FCA) for September, citing the use of expensive fuel for electricity generation.
The increase is expected to bring in around Rs33bn for the Power Division, which said in a statement that the additional FCA could have been significantly higher, by around Rs3.44 per unit, but targeted load shedding helped contain the increase.
“The Ministry of Energy (Power Division) has averted a potential Rs5-6 per unit hike in the September fuel price adjustment (FPA) through timely measures, including targeted load management, limiting the projected adjustment to Rs2.56 per unit despite rising international fuel prices and constraints on LNG supplies,” the statement said.
“Targeted load management and other measures helped limit the impact of expensive fuels used for power generation, saving consumers from an additional burden of up to Rs3.44 per unit,” the Power Division said.
It added that targeted load management for approximately two to two-and-a-half hours during September helped reduce reliance on costly alternative fuels, including furnace oil and high-speed diesel, and contained the anticipated increase in the FPA.
The division maintained the provision of imported re-gasified liquefied natural gas (RLNG) for power generation at domestic gas prices had further eased the burden on consumers by 83 paisa per unit.
However, it noted that international fuel prices had risen sharply amid the Middle East conflict and disruptions to fuel supply chains following the closure of the Strait of Hormuz. Against this backdrop, despite Qatar’s declaration of force majeure, Pakistan continued efforts to meet its RLNG requirements through available contracted supplies and additional spot cargoes, wherever necessary, the statement said.
The Power Division claimed that the combined impact of fuel price adjustments and quarterly tariff adjustments during Jan-Aug had been limited to 65 paisa per unit, equivalent to an increase of only 1.9 per cent over the base electricity tariff.
It attributed this outcome partly to tariff rationalisation measures and an additional electricity consumption package for industrial and agricultural consumers, which encouraged greater use of electricity from the national grid.
According to the Power Division, the September FPA is expected to be Rs1.45 per unit higher than that of August’s Rs1.11 per unit FCA, with an estimated financial impact of Rs32.7bn on consumers’ electricity bills in November.
The Power Division said it was continuing to monitor developments in international fuel markets and supply chains while taking measures to minimise the impact of external price shocks on electricity consumers.
On the other hand, industrial consumers are contesting the purported positive impact of industrial support package on incremental consumption and claim that Rs22.96 per unit marginal cost rate was helping a select few while the actual marginal cost of Rs34 per unit was resulting in Rs11 per unit feeding into the average consumer tariff, becoming a burden for all consumers.
The National Electric Power Regulatory Authority last week conducted a public hearing on the revision or suspension of incremental package but an outcome is awaited.