Govt allows electrifying tariff hike

As the pressure mounts on the government to replace the unprofessional top officials of the National Electric Power Regulatory Authority (NEPRA), the incumbent authorities meekly allowed the inefficient power distribution companies (DISCOs) a massive hike of Rs 3.04 per kWh in the power tariff on Friday under the monthly fuel adjustment charges for the month of August.
The additional cost will be recovered from all the consumers, except life-line ones and those falling under the jurisdiction of the Karachi Electric Supply Company (KESC), in their next bills. The Central Power Purchasing Agency (CPPA) on behalf of DISCOs had sought an increase of Rs 3.06 per kWh because of the high cost of furnace oil used for maximum power supply during the holy month of Ramadan.
The CPPA’s argument for increasing the power tariff was based upon the enhanced power generation of 600 million units during Ramadan from furnace oil, as it claimed the hydroelectric power supply during August remained minimal because of the filling up of reservoirs for the Rabi season and closure of the Chashma Nuclear Power Plant. In total, 9.514 billion units of power were produced in the month. The power produced from furnace oil yielded an impact of Rs 2.75 per kWh while that from diesel added another Rs 0.25 per kWh.
An official source said NEPRA was under pressure for the last few weeks as it was severely criticised by the ministerial committee on energy for not taking a holistic view while determining the power tariff. The committee stated that the regulator’s failure to accommodate the line losses in the power tariff was causing accumulation of the circular debt for the government. There was strong demand to replace the incumbent NEPRA management along the same lines as DISCOs and GENCOs, he said.
He said there was an unwritten agreement that NEPRA would not oppose increase in monthly fuel adjustment costs as the government’s hands were tied in the increase of power tariff. Energy experts are of the opinion that fuel cost determination could be carried out simply by an online calculator and there was no need to waste time and energy on the issue. A research study on Pakistan’s electricity regulation conducted by eminent energy expert Arshad H Abbasi of Sustainable Development Policy Institute (SDPI) finds the root cause of NEPRA’s failure to conform to its vision is fundamentally the problem of good electricity governance in the country.
It recommends that the government take immediate steps to reform NEPRA by appointing chairman and members of the authority purely on merit based upon the criteria laid out in the regulatory authority’s act. It states that the current authority of NEPRA has made the organisation virtually subordinate to the Water and Power Ministry, even though it is NEPRA’s mandate to attract investment in the power sector. It stated that there was also a need to develop hydroelectric power projects as the country had the potential for more than 120,000 megawatts (MW) of such power, out which around 57,000MW was economically and technical viable.
Pakistan could export more than 30,000MW of hydroelectric power. NEPRA had also formulated performance standards for DISCOs, which have failed to comply with them, said the report. Violations of standards could be either because the terms set out in them were unrealistic or essentially the organisation’s failure to set an enforcement mechanism, it added. The report states that consumer protection is a primary mandate for any regulator.
The total consumers of electricity as of December 31, 2010 were 19.58 million and in the same year as per record of NEPRA the total complaints received were only 1,350 from all over the country, which is only 0.0069 percent of total consumers. This shows the weak interaction with consumers, the report said.