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    On account of FCA for August: Nepra yet to make decision on Rs1.8 per unit hike

    September 28, 2023 - The News International


      The National Electric Power Regulatory Authority (Nepra) is yet to decide on National Transmission and Despatch Company (NTDC)'s request for allowing it to collect Rs1.829 per unit from consumers on account of fuel cost adjustment (FCA). However, the power regulatory company has withheld Rs40 billion funds of National Transmission and Despatch Company (NTDC) in order to protect consumers against cost burden caused by inefficient transmission system.

      NTDC's failure to upgrade the transmission system over the past few years has compelled it to turn to costly power sources, resulting in costly power to end users.,

      South-based generators, including coal-based plants and low-cost wind power, are particularly affected by the issue, hampering the full utilization and evacuation of affordable renewable and coal power from South to North.

      Nepra's observations came to light during a public hearing on the petition of power distribution companies (DISCOs), which sought approval for collecting Rs1.829 per unit in additional charges from consumers in October, attributed to the FCA for August.

      During the hearing attended by Nepra members from four provinces, Nepra Chairman Waseem Mukhtar highlighted that due to the inefficiencies of NTDC, the authority has retained Rs39 to 40 billion of NTDC's funds and has not passed these costs on to consumers. He emphasized it is unjustifiable to burden consumers with the NTDC's inefficiencies, and NEPRA always strives to make informed and justified decisions.

      An official of the Central Power Purchasing Agency (CPPA), on behalf of all the 10 state-run DISCOs, highlighted that cheaper energy generation had increased while costly sources had decreased in the national grid. He underscored that transmission line bottlenecks from South to North were limiting the addition of power from local coal-based sources and other cost-effective sources.

      Further elaborating, the petitioner explained that although generation from Thar coal was fully evacuated, issues arose with the transmission of power from imported coal plants and wind power generation in the South, as the transmission line cannot transmit power more than 4,200 MWs from South to North.

      He added that since nuclear power plants like K2 and K3 were deemed must-run plants in this context due to the low transmission capacity, some plants are kept unused for days, despite their generation being economical.

      NTDC Deputy MD Qaiser Khan explained that 90 percent of NTDC's materials including machinery are imported, and issues with opening Letter of Credits (LCs) have affected the company's projects. He also noted that land acquisition problems due to court-issued stay orders have further compounded the issues. Nepra member from Sindh Rafique Ahmad Shaikh expressed dissatisfaction with these explanations, stating that they had consistently heard the same explanations from NTDC for years. He suggested that NTDC should have sought resolution through a higher authority to address issues such as Letter of Credits (LCs) and stay orders, which could have resolved the problems. He questioned the feasibility of passing on Rs40 billion in costs to consumers, considering that consumers already face financial stress due to high power bills. Additionally, Shaikh noted the arrival of a third-party audit report and mentioned they are currently reviewing it, highlighting that the situation appears unfavorable. He also mentioned the possibility of auditing NTDC's investments and plans. Shaikh also mentioned that proceedings had been initiated regarding the extension of KAPCO's license, which was granted at the request of NTDC and NPPC based on the take and pay mode. He explained that the extension was contingent on economic merit order considerations and payments were made only for power generation.

      The regular also said that after further evaluating the data, it will issue its decision on the FCA for August in a few days.


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