DISCOs to Generate Rs. 155 Billion Through Fuel Adjustment

Things are looking to worsen for electricity consumers as K-Electric (KE) and ex-WAPDA distribution companies (Discos) seek a fuel cost adjustment (FCA) for June 2022 to generate Rs. 155 billion. According to the petition submitted by the Central Power Purchasing Agency (CPPA) on behalf of ex-WAPDA distribution companies (XWDISCOs), the monthly FCA is Rs. 9.90 per unit for electricity sold to consumers in June. This will generate Rs. 133 billion in additional funds in August as the adjustments will be made during the next month. It is pertinent to mention that the additional FCA is 166 percent higher than the reference fuel cost charged to consumers in June, depicting a huge mismatch between actual and estimated fuel costs. On the other hand, K-Electric has separately requested Rs. 11.4 per unit additional FCA for June, which will generate additional Rs. 22.25 billion in August. The hearings on both petitions will be conducted by National Electric Power Regulatory Authority (NEPRA) on 28 July 2022. Providing the reason behind the fuel costs adjustment, CPPA said that the consumers had only been charged Rs. 5.93 per unit for fuel cost. However, the actual fuel cost was Rs. 15.84 per unit. Consequently, the fuel costs had to be adjusted by Rs. 9.9 per unit. Similarly, KE explained that its high FCA was caused by a 50 percent expensive LNG and a 74 percent increase in power purchase from CPPA. Due to the decline in nuclear production, Pakistan has been relying on expensive imported RLNG to fulfill the rising electricity demand. It is also necessary to mention that hydropower production has also declined due to the closure of the Neelum Jhelum Hydroelectric Project (NJHEP) caused by a technical fault.