Pakistanis may get a refund of 31 paisas per unit in Sep bills

Pakistan's Central Power Purchasing Authority (CPPA) has requested a negative fuel charge adjustment (FCA) of 31 paisas per kilowatt-hour (kWh) for July, marking the first such request in 19 months, according to data published on the National Electric Power Regulatory Authority (NEPRA) website.

At times, the electricity provided to consumers is more expensive or cheaper than the actual cost of generation. When this happens, the CPPA or K-Electric (in Karachi's case) submits a request to NEPRA for recovering or refunding that amount. NEPRA decides on the request in a hearing and the amount is then adjusted in consumers' bills in the coming months.

The cost of power generation increased by 7% YoY to PKR 8.96 per kWh in July, up from PKR 8.34 per kWh in the same month last year. This rise was mainly driven by an increase in the cost of local coal-based generation, which climbed to PKR 11.33 per kWh from PKR 7.59 per kWh in the same month last year. However, the reference cost for local coal-based generation was set at PKR 13.34 per kWh, higher than the actual cost of PKR 11.33 per kWh.

Similarly, the cost of RFO-based generation rose by 8% YoY to PKR 30.97 per kWh in July, compared to PKR 28.73 per kWh in July 2023. This increase was attributed to higher RFO prices and the depreciation of the Pakistani Rupee. The reference cost for RFO-based generation was PKR 37.74 per kWh, while the actual cost was lower at PKR 30.97 per kWh.

On the other hand, the cost of imported coal-based generation declined by 18% YoY to PKR 16.2 per kWh in July, primarily due to a decrease in imported coal prices. The actual cost of imported coal-based generation was slightly lower than the projected cost of PKR 16.33 per kWh.

For indigenous gas-based generation, the reference cost was PKR 10.97 per kWh, while the actual cost reached PKR 13.79 per kWh, a 1% increase from PKR 13.68 per kWh in July 2023.

A hearing to review the FCA for July is scheduled for August 28. If approved, the adjustment will appear on consumers' electricity bills for September.