Nepra allows Rs7.9/unit hike for May bills

ISLAMABAD: Nepra, which on Thursday increased the electricity tariff by Rs7.90 per unit for May, 2022 under the Monthly Fuel Adjustment Mechanism has raised a red flag about CPPA (Central Power Purchase Agency) for not running the cheaper power plants on local gas and allowing costlier power plants on expensive residual fuel without valid generation licenses. The electricity regulator also sought a forensic inquiry to determine the exact amount of losses.

In its note, while notifying the increase in tariff of Rs7.90 for the month of May with an impact of Rs113 billion on the consumers of the country except KE consumers under the monthly fuel adjustment mechanism, Nepra mentioned that Guddu 747 MW power plant, which is one of the cheapest power plants due to its operation on cheap local dedicated gas, was not utilized up to the mark. The utilization of this cheaper project remained low. And the total loss due to low utilization of Guddu 747 MW since February 2021 till May 2022 remained more than around Rs53 billion. And in the month of May, the utilization factor of Guddu 747 MW was only 41.18%. The average per unit EPP of Guddu 747 MW power plant during the month of May 2022 remained at Rs6.58 per unit. Due to low utilization of the Guddu 747 MW power plant, the equivalent electricity which Guddu could not generate, was produced through costlier power plants and that caused a loss of around Rs6.06 billion during the month of May 2022.

Nepra’s dissenting note also underlines that CPPA is involved in operating those power plants which have no valid general licenses such as JPCL block 3 & 4-Kotri, Japan Power, Reshma Power, and Gulf Power. The regulator asked CPPA to delete all these plants from the Merit Order list.

The authority also noted CPPA-G is not complying with its directions regarding dispatch and its deviation. But these directions of the Authority were not complied with in letter and spirit by NPCC & CPPA-G. This non-compliance is a major impediment in identifying the weak links and their redressal.

In view of the non-compliance, the Authority, through third party, has initiated a comprehensive assessment of the system operator for the past three years while the process to carry out the audit of CPPA-G is in process. The note says: “CPPA-G is required to start compliance of the Authority decision; failure of CPPA-G shall be considered as a deliberate attempt of non-cooperation to fix the power sector issues.”

“During hearing of the FCA (Fuel Charges Adjustments ) for April 2022, a misleading factor was advocated that power plants in the Merit Order list remained deprived of natural gas fuel for the last 2-3 years.” Therefore, it was directed by the Authority that from now onwards while preparing the Merit Order list, the power plant with natural (pipeline quality) gas shall not be considered for supply of residual fuel.