Govt, Chinese Firms in Row over Import of Expensive Coal

Staff Report

The government and Chinese firms are in a row over the import of expensive coal to generate electricity.

Pakistani state-run power purchasing agency has refused to take electricity to be produced with expensive coal imported by Chinese firms.

During the hearing conducted by the national electric power regulatory authority (Nepra) here on Wednesday, it was revealed that the Sahiwal coal power plant had imported 200,000 tons of expensive coal, costing Rs. 85,000 per ton.

This coal had been stored for several months, and the government’s electricity procurement agency was reluctant to accept electricity generated from it.

However, electricity generated with coal costing Rs. 45,000 per ton was accepted. Efforts were underway to develop a formula that would consider the weighted average cost of coal for electricity generation.

Increase in Electricity Rates

Nepra, the National Electric Power Regulatory Authority, has indicated another increase in electricity rates that will burden consumers with approximately Rs. 22.6 billion.

This increase of Rs. 1.90 per unit applies to all power distribution companies (Discos). Additionally, K-Electric consumers will face an increase of Rs. 1.45 per unit, amounting to Rs. 2.6 billion, due to fuel cost adjustment for May 2023.

Nepra recently announced an Rs. 1.25 per unit increase for power distribution companies, totaling Rs. 46.5 billion.

With the new increase, the burden on consumers will rise to Rs. 22.6 billion for the fuel cost adjustment in May 2023.

Nepra conducted a public hearing regarding the fuel cost adjustment for May 2023. The Central Power Purchasing Agency-Guarantee (CPPA-G) requested an FCA of Rs. 2.05/kWh for XWDISCOs, while K-Electric requested an FCA of Rs. 1.495/kWh.

Nepra published an advertisement in newspapers on June 20, 2023, to inform the public and stakeholders about the matter. PIBTL crosses 1 million tons coal handling

The hearing was attended by Nepra officials, representatives from power companies, CPPA-G, NTDC/NPCC, the business community, journalists, and the general public.

Nepra estimates that the net FCA for May 2023 will be Rs. 1.90/kWh, resulting in an impact of approximately Rs. 22.6 billion. The decision on the matter will be made after considering all stakeholders’ comments.

Nepra and NTDC in a row over deduction

Nepra and NTDC engaged in a dispute over the deduction of Rs. 38 billion due to system constraints. NTDC officials claimed that electricity theft on two transmission lines in the South resulted in a loss of Rs. 36 billion.

However, NTDC’s request to recover an additional Rs. 1.6 billion from consumers was met with reluctance from Nepra.

NTDC argued that Nepra lacked the legal authority to deduct this amount and suggested challenging it in court. Chairman Nepra responded strongly, stating that Nepra’s role is to protect consumers’ interests and called NTDC’s claims an insult to the nation.

Concerns were raised about Nepra’s role in approving multiple power tariff increases, which already burdened consumers. Chairman Nepra defended the increases, noting that the government had already paid Rs. 1,000 billion in subsidies for tariffs last year.

He explained that factors such as the depreciation of the rupee against the dollar contributed to the rise in electricity rates.

Regarding K-Electric, Nepra conducted a public hearing for the FCA of May 2023. K-Electric requested an FCA of Rs. 1.495/kWh, and Nepra’s preliminary calculation suggests a net FCA of Rs. 1.45/kWh, with an impact of approximately Rs. 2.6 billion.

The final decision on both the FCA for Discos and K-Electric will be made after careful consideration of all stakeholders’ comments.

In conclusion, Nepra’s indications of increased electricity rates will burden consumers with billions of rupees.

The fuel cost adjustment for May 2023 will have a significant impact on consumers, and Nepra conducted public hearings to gather stakeholders’ opinions. Disputes arose over expensive coal imports, deductions due to system constraints, and the role of Nepra in approving tariff increases.

The final decisions on the FCA for Discos and K-Electric will be made after thorough consideration of all factors involved.