The government's intent to increase power tariff with respect to quarterly adjustments, annual adjustments of three Discos, Multi-Year Tariff (MYT) mechanism, National Electric Power Regulatory Authority (Nepra) and passing on of inflationary impact to the consumers was noted at a public hearing held on Wednesday under the chairmanship of Chairman Nepra Tauseef H Farooqi. Member Sindh Rafique Ahmed Shaikh, Member, Balochistan , Rehmatullah Baloch and Member KP, Engineer, Bahadar Shah assisted the Chairman.
Discos have sought adjustment of Rs 30 billion for quarterly adjustment of two quarters of 2018-19 and Rs 33 billion as annual adjustment for three Discos.
The impact of the proposed increase in tariff has been calculated at Re 0.40 or Re 0.45 per unit in case it is implemented within one year and Re 0.80 or Re 0.90 per unit if it is recovered in six months. According to tariff petition, for the quarter January to April 2019, CPPA-G intends to recover Rs 22.163 billion from consumers as Capacity Purchase Price (CPP) of which Rs 1.793 billion is for Iesco, Rs 6.142 billion Lesco, Rs 744 million for Gepco, Rs 1.306 billion Fesco, Rs 3.419 billion Mepco, Rs 2.203 billion Pesco, Rs 377 million Hesco, Rs Qesco Rs 6.563 billion, Sepco Rs 1.007 billion and Tesco Rs 1.391 billion.
The proposed recovery in the name of variable O&M is Rs 123 million, UoSC & MoF Rs 1.681 billion, and impact of T&D losses on monthly Fuel Price Adjustment (FPA) Rs 2.071 billion. With deduction of Rs 5.811 billion as impact of extra and less purchases, the total proposed adjustment for January to April 2019 has been calculated at Rs 20.226 billion.
For the quarter April-June 2019, Discos have sought to recover Rs 11.604 billion from consumers under the head of CPP, Rs 733 million as variable O&M, Rs 1.168 billion as UoSF and MoF and Rs 1,693 billion as impact of T&D losses on monthly FPA. After excluding impact of extra and less purchases of Rs 3.697 billion, the total proposed recovery from consumers has been calculated at Rs 10.036 billion.
The total proposed quarterly adjustments have been calculated at Rs 30.262 billion, of which Rs 1.228 billion is for Iesco, Rs 11.356 billion Lesco, Rs 1.354 billion Gepco, Rs 6.927 billion Fesco, Rs 5.649 billion Mepco, Rs 6.449 billion Pesco, Rs 1.069 billion Hesco, Rs 10.309 billion Qesco, Rs 1.303 billion Sepeco and Rs 3.709 billion Tesco.
Three Discos, ie, Iesco, Lesco and Fesco have also sought annual adjustments of Rs 33.145 billion, of which prior period cost is Rs 31.610 billion and indexation-distribution margin 2019-20 is Rs 1.535 billion. The adjustment is meant to cover fluctuation in dollar-rupee parity. The impact of annual adjustments will be over and above increase under PPP and allied costs.
According to Nepra, CPPA-G has also submitted power purchase price forecast for fixation of power purchase for 2019-20. In July, 2019 the government also increased power tariff by Rs 1.80 per unit for industrial sector and extended subsidy to domestic consumers who consume up to 700 units per month.
CEO, CPPA-G, Abdil Lodhi requested the Authority to approve Rs 19.7 billion as inflationary impact of O&M as the power sector is facing liquidity crunch . However, when Sajid Akram of tariff section (Nepra) contested that the Authority had allowed Rs 24 billion to Discos as write offs in 2015 which were notified in 2018 and to be collected by March 2019. He maintained that Discos have to submit a report of write offs with the approval of their respective boards but they did not do so. When the Authority asked this question to the representative of Mepco, he expressed his ignorance.
In 2017, Nepra had revised the allowed limit of losses from 15.25 percent to 16.28 per cent to Discos on a provisional basis, financial impact of which had been calculated at Rs 10 billion on the basis of 14 paisa per unit based on an independent subsidy. The erstwhile Ministry of Water and Power had also requested Nepra to allow Rs 65 billion as write-offs in 2012-13. However, the regulator allowed an amount of Rs 24 billion as write-offs on a provisional basis which is equal to 24 paisa per unit.
Abid Lodhi, agreed to the questions raised by Sajid Akram but stated that he was asking for only inflationary impact of O&M. He, however, clarified that the projected sale of electricity in 2018 was 103 billion units but the sale was recorded at 92 billion units due to which CPPA-G faced financial loss of Rs over Rs 29 billion. He further stated that the issue of O&M be separated from other aspects of tariff. He also requested Authority to club Distribution Margin with quarterly adjustments. Nepra's technical team opposed the proposal, and queried why CPPA-G was intent on clubbing Distribution Margin with quarterly adjustments.
Mubashar of Nepra apprised the Authority that whatever cost is being claimed as inflationary impact in 2017, CPPA-G has already recovered it and argument of backlog is not correct. Chairman Nepra directed Discos to submit documents relating to write offs duly approved by their respect Boards as early as possible.
Joint Secretary, Power (Finance) Power Division, Zargham Eshaq Khan stated that Nepra is to determine uniform tariff across the board, adding that it is the federal government which decides about the volume of subsidy.
The representative of APTMA, Shahid Sattar opposed any increase in tariff demanded by the CPPA-G and Discos and gave APTMA's comments in writing on the proposed increase in tariff.
Central Power Purchasing Agency Guaranteed (CPPA-G) in its tariff petition has sought 1.87 per unit increase for August 2019. For this purpose, Nepra will hold a public hearing on October 2, 2019.
