Probe into Rs7.13 FCA hike ordered – Business

ISLAMABAD: Flabbergasted by an unprecedented Rs7.13 per unit additional fuel cost adjustment (FCA) demanded by distribution companies (Discos), the National Electric Power Regulatory Authority (Nepra) announced that it would conduct an investigation into the matter and would not give a judgement on FCA request until the conclusion of the probe.

While presiding over a public hearing on an FCA petition filed by Central Power Purchasing Agency (CPPA) on behalf of Discos to extract another Rs57 billion from consumers in March on account of electricity consumption in January, Nepra chairman Waseem Mukhtar wondered why Discos sought such a massive increase in tariff while there had not been any change in fuel price and exchange rate.

Nepra’s member tariff Rafique A. Shaikh reported that almost half of the burden (about Rs26bn) out of Rs57bn demand was on account of the inability of the national grid authorities to ensure smooth operations of the North-South transmission corridor. The Rs27bn cost of the incompetence of power companies has to be borne by the consumers who simultaneously suffered 8-12 hours of power outages. “Average load-shedding in Discos remained around eight hours,” he said, adding that some of them also had a two-hour power gap.

The representatives of the National Transmission and Despatch Company (NTDC) said the electricity consumption was declining as is evident from 12-13pc lower consumption in January when compared to last year, which resulted in higher fuel costs and caused instability to the grid.

This did not impress Mr Shaikh who said the low demand in the north could have been addressed through better power supply in the south where the consumers faced 10-12 hours of load cuts and deplored that internal issues of power companies were causing difficulties to the consumers.

Mr Mukhtar said the regulator was surprised to see such a big jolt of Rs7.13 per unit additional FCA and had expected the secretary Power Division to be present during the public hearing but was unavailable for some other engagements. “We also have to face our conscience,” he said, adding the regulator could not simply allow whatever costs the power companies want to charge consumers.

He said the regulator would investigate the matter in detail using section 27 of the Nepra Act and added that it would not be an easy thing to address the agony stirred by a massive price shock. He said the companies were not installing fresh connections and at the same time taking refuge behind low demand. Nepra “should not be considered a rubber stamp” as it was also required to look after consumers’ interests.

He said there was no accountability in the power system but the regulator would introduce it.

The regulator expressed grave concern over the burden proposed by distribution companies and attributed it to systemic deficiencies. Mr Shaikh said inquiries revealed discrepancies in load-shedding patterns across different regions despite claims of low power demand, prompting scepticism towards the authenticity of the proposed adjustments.

The ongoing situation demands urgent attention and a proactive approach from the government, economy, and the power sector, stated Mukhtar, urging the Power Division to devise effective strategies to mitigate the prevailing challenges.

He called for tangible solutions to prevent further escalation of prices and demand, cautioning against perpetuation of the current cycle.

Published in Dawn, February 24th, 2024