strong>The government has reportedly not consulted National Electric Regulatory Authority (Nepra) prior to announcement of a reduction in power tariff by Rs 2.32 per unit, well informed sources told Business Recorder. According to prevalent rules and procedures, Central Power Purchasing Agency (CPPA) submits the impact of previous month’s fuel price on power generation cost and fuel mix along with a reference price of fuel to determine the actual impact on tariff under monthly fuel adjustment mechanism.
“We have not received anything from CPPA so far regarding fuel adjustment in November 2014, so we don’t know how much reduction in tariff will be proposed by the entity under monthly fuel adjustment mechanism, said one of the officials of Nepra on a condition of anonymity. He was of the view that Nepra notifies only fuel price adjustment whereas the federal government is empowered to issue a notification in tariff reduction.
When contacted, Additional Secretary In-charge, Younas Dagha, said that total reduction in tariff will be around Rs 2.92 per unit, of which Rs 2.32 to be directly passed on to the consumers, including 70 paisa on account of fuel adjustment and additional benefit of 60 paisa per unit due to a decrease in taxes, etc. He was of the view that the World Bank and International Monetary Fund (IMF) had projected a 70 paisa per unit reduction in tariff in November under the monthly fuel adjustment mechanism.
“A 75 percent reduction in tariff is due to merit-based power generation – a step that I took as Secretary Water and Power Ministry and 25 percent on account of monthly fuel adjustment,” he added. In reply to a question, Dagha said that the government saved Rs 27 billion previous months, of which Rs 20 billion was due to merit-based power generation which implies the maximum generation obtained from most efficient power plants while Rs 7 billion saving was on account of change in slabs.
He said the government saved 0.250 million tons of furnace oil this year while opting for merit-based generation. Last year, almost 0.5 million tons of furnace oil was consumed on power generation. Younas Dagha further stated that the country also saved precious $160 million foreign exchange due to a reduction in import of furnace oil. Answering another question, he said that working regarding a tariff reduction will be sent to Nepra on Saturday (today) and they will complete the formality in 10 to 12 days.
SOURCE: RECORDER REPORT