Tag: NEPRA

  • NEPRA approves Rs5.40 per unit power tariff increase for quarterly adjustment

    NEPRA approves Rs5.40 per unit power tariff increase for quarterly adjustment

    The National Electric Power Regulatory Authority (NEPRA) has given its approval for a quarterly adjustment, resulting in an increase of Rs5.40 per unit in the power tariff.

    This adjustment comes as NEPRA recognises the limitations of the current structure of electricity distribution companies in providing relief to consumers. However, it’s important to note that this revised tariff won’t apply to Lifeline and K-Electric consumers.

    According to Samaa, NEPRA’s decision to revise the tariff comes after a thorough review of requests from distribution companies to raise the tariff by Rs5 per unit for the fourth quarter of the fiscal year 2022–23. Among these requests, FESCO, GEPCO, HESCO, and IESCO sought increases of Rs23.49 billion, Rs16.13 billion, Rs9 billion, and Rs9 billion, respectively.

    Additionally, LESCO requested a substantial increment exceeding Rs31 billion, while MEPCO, PESCO, QESCO, SEPCO, and TESCO collectively proposed tariff hikes totaling Rs27 billion, Rs9 billion, Rs7 billion, Rs5 billion, and Rs4 billion.

    Consumers should be aware that this tariff adjustment will be gradually recovered during September, October, and November, resulting in an added financial burden of Rs5.40 per unit.

    Distribution companies, in their submissions, highlighted revenue challenges stemming from decreased industrial demand. Particularly, LESCO faced a deficit of three billion units of electricity due to climate-related issues and industrial shutdowns. Both LESCO and HESCO faced higher capacity charges due to industry closures and reduced demand.

    Presently, there’s a backlog of approximately 350,000 pending connections with distribution companies. To recover revenue and address declining demand, the Central Power Purchasing Agency imposed surcharges amounting to Rs7.91.

  • Nepra approves Rs2.31 per unit tariff increase for K-Electric consumers

    The National Electric Power Regulatory Authority (Nepra) has approved a tariff increase of Rs2.31 per unit for K-Electric (KE) consumers due to June 2023’s monthly fuel charges adjustment. This is slightly below KE’s requested Rs2.34 per unit hike. The new tariff takes effect in August and excludes lifeline consumers and electric vehicle charging stations.

    A public hearing on July 26, 2023, discussed KE’s proposal to address higher fuel costs for electricity generation in June. KE generated electricity at Rs24.90 per unit internally, while government-supplied electricity cost Rs11.56 per unit during that period. Nepra’s analysis resulted in an upward revision of Rs2.31 per unit for June, compared to KE’s requested increase.

    Conversely, Nepra raised the power tariff by Rs1.81 per unit for ex-Wapda distribution companies (DISCOs) in June’s fuel charges adjustment, slightly less than the hike for KE consumers. The Central Power Purchasing Agency-Guarantee (CPPA-G) requested a tariff increase of Rs1.88 per unit on behalf of DISCOs.

    This tariff adjustment, effective in August, applies to all DISCOs customers except lifeline consumers and electric vehicle charging stations. It follows a public hearing held by Nepra on July 26. Earlier, DISCOs customers paid Rs1.90 per unit under May 2023’s fuel charges adjustment, making the new rate Rs0.09 per unit lower.

    While the tariff increase has raised concerns among consumers, it has also spotlighted the delay in approving renewable energy projects. During KE’s petition hearing, an industrial consumer, Rehan Javed, highlighted pending Requests for Proposals (RFPs) with Nepra, which could expedite affordable electricity production through renewables, benefiting Karachi’s businesses.

    Nepra member Rafique Ahmed Shaikh expressed disappointment in KE’s slow progress in embracing renewable energy. Delayed approval of RFPs has hindered renewable energy initiatives.

    The Ministry of Energy’s bid to raise the base tariff for the new fiscal year, potentially leading to record-high prices, underscores the urgency of integrating renewable energy into the national energy mix.

  • Load shedding and unbearable hike in electricity prices hit Pakistani homes and businesses

    Load shedding and unbearable hike in electricity prices hit Pakistani homes and businesses

    Pakistan is facing an ongoing and unbearable increase in electricity tariffs, causing hardships for the majority of the population. The government justifies these price hikes by claiming they are under pressure from the International Monetary Fund (IMF) to generate more revenue. However, the tariff increase is mainly due to fuel price adjustments and high taxes imposed by the government.

    Consumers, especially low- to middle-class households, are struggling to pay their electricity bills, which have more than doubled. The rise in fuel price adjustments and government taxes further exacerbates the burden on consumers. The government’s commitment to the IMF to implement a fifty per cent increase in the base tariff from July to October contributes to the escalating bills.

    Unfortunately, the increase in electricity prices is expected to continue, and there is no progress in essential power sector reforms to reduce system losses, corruption, power theft, and reliance on imported fuels. As a result, the National Electric Power Regulatory Authority (NEPRA) has raised the average tariff to ensure funds for loss-making power distribution companies, putting additional financial strain on consumers.

    The government claims that the tariff increase is necessary to meet the IMF’s requirements and support energy sector viability. However, the business community also suffers, fearing a loss of competitiveness and increased costs. Industries have cut down production due to high energy prices and inflation, affecting economic growth and job creation.

    Many argue that successive governments have failed to implement essential structural reforms, leading to Pakistan’s economic predicament. The solution proposed by economists involves fixing the energy sector’s deep-rooted issues, taxing sectors adequately, and implementing a credible privatization plan to reduce pressure on the budget.

    In conclusion, Pakistan’s never-ending increase in electricity tariffs has become a major burden for the population, and without significant reforms, the situation is unlikely to improve. The government’s need to meet IMF requirements clashes with the urgency of boosting industrial activity and economic growth, leaving the country in a challenging economic predicament.

  • Govt implements Rs4.96 per unit power tariff hike, aims to collect Rs3.28 trillion from consumers

    Govt implements Rs4.96 per unit power tariff hike, aims to collect Rs3.28 trillion from consumers

    The National Electric Power Regulatory Authority (Nepra) announced a significant increase of Rs4.96 per unit in the electricity base tariff for the fiscal year 2024, in response to a demand from the International Monetary Fund (IMF). This adjustment will result in the government collecting Rs3.281 trillion from power consumers across all distribution companies.

    Additionally, the government is actively working on raising gas rates, as the Oil and Gas Regulatory Authority (OGRA) has already determined a 45-50 per cent increase in gas prices on June 2, 2023.

    The implementation of the power tariff hike is scheduled to commence on July 1, with the tariff rising to Rs29.78 per unit from the current rate of Rs24.82 per unit.

    Customers utilising time-of-use (ToU) meters will be charged up to Rs49.35 per unit. During peak hours from 5pm to 11pm, they will pay Rs49.35 per unit, while during non-peak hours, the charge will be Rs33.03 per unit.

    This decision has imposed an additional burden on the residents of Karachi, as Nepra has also raised the monthly fuel charges adjustment for the month of May by Rs1.44 per unit, which will be reflected in the billing for July.

    However, the increase in the base tariff will be implemented differently for various categories. Some categories will experience a lower increase, while for others, the increase may reach up to Rs6 per unit, depending on the government’s decision.

    The power regulator has determined an average increase in the base tariff of Rs4.96 per unit. Apart from the new base tariff of Rs29.78 per unit, end consumers will also be required to pay a financing cost surcharge of Rs3.23 per unit from July 1.

    This surcharge aims to generate Rs335 billion to address the power sector’s debt and liabilities, which currently amount to Rs2.6 trillion. Furthermore, consumers will continue to pay the Tariff Rationalisation Surcharge of Rs0.47 per unit.

    Within the base tariff increase of Rs4.96 per unit, the payment for capacity charges has risen to 70 per cent, equivalent to Rs3.472 per unit, while 30 per cent accounts for energy prices.

    The new base tariff increase has been calculated considering a dollar value of Rs287, an inflation rate of 17 per cent, and a 7 per cent growth in electricity generation. As a result, consumers will pay capacity charges totaling Rs1.874 trillion, compared to Rs1.251 trillion in 2022-23.

    Unfortunately, the end electricity consumer in Pakistan is being burdened with additional costs to compensate for ongoing inefficiencies in the power sector, in addition to paying for the actual cost of electricity. These costs include tariff rationalisation charges, financing cost surcharges, electricity duty, PTV license fee, GST, income tax, extra tax, further tax, and sales tax.

    In reality, consumers are paying 31 per cent above the actual cost of electricity in the form of surcharges, duties, and taxes. Electricity Duty, a provincial duty, is levied on all consumers, ranging from 1.0 per cent to 1.5 per cent of Variable Charges. General Sales Tax (GST) is charged at a rate of 17 per cent on all consumers under the Sale Tax Act 1990.

    Income Tax is applicable to non-taxpayer consumers at varying rates depending on the tariff and electricity bill amount, and commercial consumers pay 5 per cent on bills up to Rs20,000 and 7.5 per cent on bills exceeding Rs20,000. Further tax of 3 per cent is charged from all consumers without a Sales Tax Return Number (STRN), except for domestic, agriculture, bulk consumers, and street light connections.

    The increase in power tariffs was a necessary requirement imposed by the IMF to provide financial assistance to Pakistan. The IMF has consistently urged the government to raise tariffs and eliminate power subsidies as part of its efforts to reduce the country’s fiscal deficit.

    However, Nepra attributes the tariff increase to factors such as low sales growth, rupee devaluation, high inflation, exorbitant interest rates, and the addition of new capacities.

  • Govt to implement Rs7 per unit power tariff hike, expecting over Rs3.2 trillion in revenue

    Govt to implement Rs7 per unit power tariff hike, expecting over Rs3.2 trillion in revenue

    The government is planning to raise the power base tariff by approximately Rs7 per unit. This move is expected to generate over Rs3.2 trillion in additional revenue from power consumers. The International Monetary Fund (IMF) Executive Board is set to discuss a stand-by arrangement, which is the final step in solidifying the IMF Staff Level Agreement. The government will then need to fulfill the program’s requirements.

    The increase in power tariff is a crucial condition set by the IMF for providing financial assistance to Pakistan. The Fund has been urging the government to raise the tariff and eliminate power subsidies to reduce the country’s fiscal deficit. The proposed increase, along with an 18 per cent GST on bills, could lead to a significant financial burden on power consumers.

    Nepra, the regulatory authority, has conducted hearings with distribution companies (Discos) on this matter. While the privatised company, K-Electric, will be insulated from the increase in base tariff, the price of electricity it draws from the national grid will become costlier.

    The increase in base tariff, estimated at nearly Rs7 per unit, is awaiting submission to the federal government for notification. If finalised, it would raise the base tariff to Rs31.80 per unit from the current Rs24.80. The increase is aimed at reducing the power sector’s circular debt accumulation, which currently stands at approximately Rs2.64 trillion due to inefficiencies in power generation, transmission, and distribution.

    The rise in power tariffs will impact consumers across residential, commercial, and industrial sectors, leading to inflation. Businesses will pass on the increased costs to consumers, while households will need to allocate more funds for power, straining their budgets. However, the government asserts that this step is necessary to revive the power sector and the economy. It has also promised targeted subsidies to alleviate the burden on the poor and vulnerable.

    In a positive development, the government has made a payment of Rs142 billion to Independent Power Producers (IPPs), reducing their outstanding dues and improving their cash flows. However, the power sector still faces a circular debt of Rs2.64 trillion. Additionally, the IMF has called for a 45-50 per cent increase in gas tariffs, affecting consumers of Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL).

    The government is likely to continue its policy of having high-end consumers subsidise low-end consumers. The circular debt in the energy sector amounts to over Rs4.30 trillion, including debts from the oil and gas sector.

    Finance ministry and Nepra officials have experienced confusion regarding the finalisation of the increase in base tariff, as the IMF board meeting approaches. The regulator is awaiting projections from the finance ministry to determine the final base tariff. The government aims to achieve a value of Rs240 for the US dollar, despite setting it at Rs290 billion in the federal budget.

    Overall, the government’s objective is to address the financial challenges in the power sector while providing support to those affected by the tariff increase. The proposed measures are crucial to stabilise the power sector and stimulate the economy.

  • Weekly inflation up by 4% due to sharp increase in electricity prices

    Weekly inflation up by 4% due to sharp increase in electricity prices

    Owing to a sharp increase in electricity prices, the sensitive pricing index (SPI), which measures weekly inflation, increased by more than 4 per cent.

    According to data released on Friday by the Pakistan Bureau of Statistics (PBS), the SPI-based inflation rate increased 4.13 per cent from the previous week to the week ending October 27 while increasing 30.68 per cent from the same time last year.

    The cost of power, salt, rice, and other basic commodities went up on average during the previous week.

    According to Geo, there has been a decrease in the cost of 16 goods, including chicken, tomatoes, onions, and masoor pulses. In the meantime, the prices for 14 necessities remained the same.

    Electricity costs up by 89 per cent

    An increase from week to week is mostly caused by an 89 per cent increase in electricity costs.

    Recall that a negative Rs10 per unit adjustment to fuel prices was implemented in September. The government opted to postpone the Rs. 10 per unit adjustment for the June fuel price, but it had already been accounted for in the inflation figures for August, therefore it was corrected for in the September inflation figures.

    Inflation is expected to be 25.7 per cent in October, up from 23.2 per cent in September, according to the brokerage.

    In the week under examination, the combined income group index increased from 205.27 points for the week that concluded on October 20 to 213.74 points.

    In comparison to the prior week, the SPI for the income bracket with the lowest income rose by 4.64 per cent. The group’s index was 220.56 points, up from 210.78 points the previous week.

    Increase in prices

    Prices of the following items increased:

    Food items

    Salt powdered: 2.57 per cent

    Tea Lipton: 1.89 per cent

    Rice: 1.24 per cent

    Garlic: 1.04 per cent

    Non-food items

    Electricity charges for Q1: 89.34 per cent

    Energy saver: 1.57 per cent

    Reduction in prices

    Prices of the following items decreased:

    Food items

    Tomatoes: -3.77 per cent

    Onions: -2.97 per cent

    Pulse Masoor: -2.50 per cent

    Chicken: -1.86 per cent

    Pulse Gram: -1.35 per cent

    Gur: -1.09 per cent

    Non-food items

    LPG: -0.72 per cent

  • NEPRA okays Rs3.21 per unit hike in power tariff

    NEPRA okays Rs3.21 per unit hike in power tariff

    A quarterly adjustment of Rs3.21 per unit of power for the period of April to June 2022 has been approved by the National Electric Power Regulatory Authority (NEPRA).

    A further burden of Rs93.95 billion will be placed on energy consumers as a result of the most recent price increase. To be effective as of October 1, 2022, the authority transmitted its decision to the federal government.

    According to specifics, the prior adjustments’ time period ended on September 3, 2022. As of October 1, the electricity customers will not receive any respite as the authority implements fresh adjustments immediately following the expiration of the prior adjustment.

    For K-Electric customers, the NEPRA earlier in the day authorised a cut in power rates of Rs4.89 per unit due to a fuel cost adjustment (FCA) for August 2022.

    The notification states that, in contrast to KE’s plea for Rs4.21, the fuel cost adjustment for K-Electric customers would be reduced by Rs4.89 per unit. However, it specified that the tariff cut for July would only be valid for that particular month.

    According to the NEPRA, all consumer categories would be affected by the drop in FCA, with the exception of lifeline consumers, home consumers consuming up to 300 units, agriculture consumers, and EVCS (Electric Vehicle Charging Station).

  • PM orders discos to suspend staff leaves and work nonstop to correct electricity bills

    PM orders discos to suspend staff leaves and work nonstop to correct electricity bills

    The staff of power distribution companies (DISCOs) must work nonstop to correct the electricity bills of consumers using less than 200 units per month, following a directive from Prime Minister (PM) Shehbaz Sharif.

    He gave the order for all staff members’ leaves to be ended, the bills should be corrected right away, and a report should be given to him. In order to deposit electricity bills in the upcoming days, he continued, the banks should be instructed to stay open.

    PM Shehbaz gave the orders while presiding over a high-level meeting to address the issues facing electricity consumers.

    Furthermore, a high-level committee was formed by the prime minister to address the issues of power users.

    The gathering was informed that efforts are being made to ensure the adoption of the relief package for power consumers that the prime minister had announced. According to him, bill adjustments are being made as part of the relief for 16.6 million consumers related to the change in fuel prices.

    The relief measures must be put into effect right away, according to directives issued by the prime minister.

  • PM Shehbaz announces relief for 17 million power consumers

    PM Shehbaz announces relief for 17 million power consumers

    Prime Minister Shehbaz Sharif stated that 17 million of the nation’s electricity consumers would not be required to pay the excessive fuel cost adjustment (FCA) charges that are included in their monthly bills.

    According to Express, the prime minister outlined the rationale behind the FCA and claimed that it had resulted in a substantial increase in power rates for July and August due to high international oil prices.

    He claimed that following discussions with the IMF, PML-N leader Nawaz Sharif, and other coalition leaders, it was decided that 17.1 million energy users would not be required to pay the FCA.

    The remaining 13 million power consumers who are in a better financial situation are also being reviewed by the government, according to PM Shehbaz.

    Later, the PML-N tweeted that the relaxation will only apply to people with low electricity consumption.

    Shehbaz stated that Power Minister Khurram Dastgir will give a thorough explanation of the announcement’s process and how it would actually operate.

    The FCA exception would also apply to tube well users, who the prime minister estimated to number approximately 300,000.

    Earlier, PM Shehbaz also abolished the budget’s fixed tax on traders.

  • Fuel Cost Adjustment: Consumers protest against inflated electricity bills

    Fuel Cost Adjustment: Consumers protest against inflated electricity bills

    Power consumers protested in major cities against the government and power supply companies due to excessive residential and commercial bills that were issued under the pretext of Fuel Cost Adjustment (FCA).

    A number of Lahore residents were seen protesting outside LESCO offices, complaining about the skyrocketing electricity bills, chanting anti-LESCO slogans at Dharam Pura, Begum Kot and Ghazi Road.

    A number of farmers in Jhang also participated in a protest by burning their power bills while obstructing traffic on the Jhang Road. On the other hand, the shopkeepers and locals of Faisalabad organised a sizable protest against FESCO for billing residential and commercial customers for nearly twice the actual cost of electricity.

    PM Shehbaz demands urgent report on inflated electricity bills

    In response to complaints from the public about excessive electricity bills, Prime Minister Shehbaz Sharif ordered the relevant authorities to provide an immediate report to address the issue.

    The premier ordered the concerned officials to present a thorough report with recommendations for resolving consumer complaints against energy bills on an urgent basis.

    What is FCA?

    In addition to criticising the power supply companies, consumers are questioning the FCA charges that take up a significant portion of their monthly bills.

    Understanding the actual fuel cost (the cost of fuel in a month) and the reference fuel cost is crucial for comprehending the fuel price adjustment.

    Simply put, FCA is charged/adjusted in customers’ monthly bills to reflect the actual increase or decrease in fuel prices.

    Based on the price of fuel (such as coal, LNG, or furnace oil) used in the nation’s various energy sources, the total cost of fuel used in the production of electricity in a month (basket fuel cost) is calculated.

    The entire fuel cost for that month is therefore compared to the reference fuel cost at the end of each month, and as a result, the FCA is applied to the power bills after two months.

    The electricity bill will reflect a change in the FCA amount if the total fuel cost for that month exceeds the reference cost, while it will reflect a change in the FCA amount if the total fuel cost is less than the reference cost. We refer to this as a fuel price adjustment.

    How power suppliers calculate FCA?

    Whenever a power plant uses coal, it is possible to estimate how much coal was burnt and at what cost, as well as the total cost of the energy needed to generate the power.

    For instance, if hydel electricity generation has increased, the overall fuel price will reduce; likewise, if gas is consumed more frequently in a month due to its higher price, the fuel price would climb.

    It is also impacted by the rupee’s appreciation or depreciation. This is due to the fact that coal, LNG, and furnace oil are imported, therefore a weakening or strengthening rupee directly affects the cost as a whole.