According to sources, the Finance Minister has already given commitment to the International Monetary Fund(IMF) that the benefit of reduction in oil prices will not be further passed on to the consumers on the plea that it is the best time to reduce the volume of power sector's subsidy. The regulator approved refund of Rs 2.08 per unit to consumers in response to a petition filed by the Central Power Purchasing Agency (CPPA) which claimed that the price of electricity generated in March 2015 was Rs 6.0412 per unit against reference price of Rs 8.0985 per unit, proposing a refund of Rs 2.0573 per unit to consumers.
According to the documents provided to Nepra, NTDC generated 1,364 GWh with hydel constituting 20.86 per cent of total generation. The price of electricity generated from coal was 7.58 GWh (0.12 per cent of total generation) at a cost of Rs 4.4998 per unit. Independent Power Producers (IPPs) generated 302.8 GWh electricity (4.63 per cent) in March 2015 by using High Speed Diesel (HSD) price of which was calculated at Rs 13.8 per unit.
IPPs also generated 2,540.7 GWh electricity in March which was 38.8 per cent of total generation. NTDC calculated the furnace oil fired electricity at Rs 9.72 per unit. Gas-fired power plants generated 1,669.6 GWh (25.5 per cent of total generation) at a price of Rs 4.5655 per unit. Nuclear generation was 452 GWh; cost of which was calculated at Rs 1.18 per unit. The price of electricity imported from Iran was Rs 10.2 per unit whereas the cost of mixed electricity including baggase was estimated at Rs 7.87 per unit. However, CPPA did not mention the price of wind electricity because of its higher cost.
The documents submitted by NTDC reveal that total generation in March 2015 was 6,541.10 GWh at a price of Rs 5.8869 per unit with a total cost of Rs 38.507 billion. Supplemental charges were calculated at Rs 130 million ( Rs 0.0199 per unit). In March, transmission losses were recorded at 193.59 GwH which are almost equal to electricity imported from Iran and generated from mixed sources and wind. The cost of lost electricity was Rs 0.1816 per unit.
The Ministry of Water and Power maintains that subsidy was provided to domestic consumers up to 300 units and to agriculture consumers on a flat rate. Out of total bulk of subsidy, more than 85 per cent subsidy was provided to domestic consumers. The tariff determined by Nepra was subject to monthly adjustments pursuant to section 31(4) of the Nepra Act under monthly Fuel Charge Adjustments (FCA). These price adjustments are negative owing to lower prices. Such low determined FCA with the existing applicable consumer tariff, domestic category with consumption up to 100 units would actually pay less than life line consumers eg @ Rs 1.42 per unit ( Rs 5.79 current tariff up to Rs 100 units)- Rs 4.37 kwh (FCA)= Rs 1.42 per unit for February 2015 resulting in a huge loss to national exchequer besides creating an anomaly with what lifeline consumers pay.
Owing to this adjustment, the highly subsidised class of consumers would benefit from lower oil prices while GoP was already paying an approximately Rs 95 billion annually or average Rs 4.40 per unit as a subsidy.