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Power crisis to continue till 2020

The power generation and distribution companies have failed to come up with a viable solution to the ongoing electricity crisis in the country as the National Electric Power Regulatory Authority (Nepra) has said that the power shortfall would continue to trouble the nation till 2020.

It said that under the present scenario there was no solution to the power crisis in the country as thousands of workers had become unemployed due to the prevalent shortfall. At present 14,000MW is being produced and the demand stands at 23,000MW.

In a meeting Nepra also expressed its annoyance over the surge in transmission losses registered by distribution companies (Discos) in October, which are slated to cost consumers an additional Rs1.47 billion in charges.

The issue came to light at a Nepra hearing of a petition filed by the Central Power Purchase Agency (CPPA). While the regulator approved an increase of Rs0.04 in the power tariff under the monthly fuel adjustment mechanism, this hike will not apply to lifeline consumers or to KESC consumers.

The cumulative impact of this increase is supposed to come in at Rs5.93 billion for the month of October. Meanwhile, the regulator also came down hard on the CPPA for the sharp increase in transmission losses and has asked the agency to present a written report at the next hearing.

It was also discussed at the meeting was the issue of furnace oil used by Kot Addu Power Company (Kapco) for electricity generation in the month of October. Shaukat Ali Kundi, who is a Nepra member from Khyber Pakhtunkhwa, raised objection to Rs590.50 million price differential claims filed by Kapco.

In the wake of Kundi’s observations, the CPPA admitted that Kapco had agreed to generate electricity using High Sulphur Furnace Oil and had cut a deal to this effect with the Discos. However, Kapco has long been using the much costlier Low Sulphur Furnace Oil to generate electricity and has been recovering the same from NTDC. This amount, Nepra was told, will eventually be recovered from consumers through higher tariffs.

While the CPPA representative at the meeting claimed that the agency has asked the ministry of water and power not to include the price differential in computing the monthly fuel adjustment cost, the assertion failed to protect him from Kundi’s ire. “When Nepra has not approved the Kapco agreement, how can this cost be recovered from consumers?” demanded a belligerent Kundi. Accordingly, Nepra asked Kapco to submit the power purchase agreement.

According to Kundi, after Wapda was unbundled in 1997, the CPPA has not finalised the power sales purchase agreements. “As a result, all CPPA transactions carry no legal ground, which is why I wrote the dissenting note,” he said. “If the National Accountability Bureau or the Federal Investigation Agency initiate a probe against CPPA, its top officials will land in hot water.” According to Kundi, the CPPA must ink the sales purchase agreements immediately in order to protect consumers.

Later, while presenting the detailed breakdown of electricity charges, CPPA officials said that they sold 7.6162 billion units to the Discos in the month of October and the cost incurred on generation of these units stood at Rs53.58 billion. As per the agency’s calculations, the cost of electricity generated from high-speed diesel remained Rs22.34 per unit while furnace-oil generated electricity cost Rs16.67 per unit. The cost of electricity from coal stood at Rs3.79 per unit while gas, nuclear and hydel power cost Rs5.25, Rs1.13 and Rs0.08 per unit respectively.

Interestingly, this was the first Nepra meeting since the appointment of its controversial chairman Habibullah Khilji. Since several members of the authority were hesitant about attending the hearing in Khilji’s presence, the hearing was delayed by an hour till Khilji persuaded the members to join in.

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