Nepra seeks approval for Rs23 billion FCA hike

In Pakistan, despite the majority of power generation being sourced from cheaper local fuels, the government is seeking approval from the National Electric Power Regulatory Authority (Nepra) to impose an additional Rs23 billion in fuel cost adjustment (FCA) on consumers for electricity consumed in March. The Central Power Purchasing Agency (CPPA) has requested an extra Rs2.94 per unit in fuel costs to be recovered from consumers through their May bills, which is a significant increase from the pre-fixed fuel cost of Rs6.44 per unit in March.

This move has raised concerns about the power sector's ability to accurately forecast fuel costs, with recent additional FCAs ranging between 50% and 115% higher than initially estimated. Despite over 79% of electricity being generated from cost-effective local resources, consumers are facing rising bills due to various tariff adjustments and increased fuel costs.

The proposed FCA hike for March is attributed to higher domestic coal and gas prices, even though imported fuels were not utilized. The petition by CPPA highlights a substantial difference between the reference fuel cost and the actual cost incurred, leading to a significant financial burden on consumers.

With a decline in electricity consumption compared to the previous year, the Rs2.94 per unit FCA for March represents a more than double increase from the same period last year. Nepra is set to review the petition for the FCA rise on April 26, amidst growing concerns over escalating electricity costs despite a significant share of power being generated from economical local sources.