Central Power Purchasing Agency seeks Rs2.52 per unit hike in electricity tariff

Nepra has scheduled a public hearing to deliberate on the CPPA’s application on August 27, where the merits of the requested adjustment will be scrutinized against the backdrop of current energy generation expenditures.

The data provided in the application highlights the diverse and complex energy mix utilized by the country during the month of July, which significantly influenced the overall cost of production. According to the filing, imported Liquefied Natural Gas (LNG) played a substantial role in the power generation portfolio, accounting for 10.78 percent of the total electricity produced.

The financial impact of this LNG-based generation was significant, totaling Rs77.19 billion, with the specific fuel cost for this segment reaching Rs47.37 per unit. This reliance on imported fuel sources remains a primary driver for the volatility in monthly tariff adjustments, as global market fluctuations directly impact the cost passed on to the end-user.

Beyond LNG, the report detailed the contributions of various other energy sources to the national grid. Hydropower remained the most significant contributor, accounting for 39.81 percent of the total generation, providing a relatively stable and cost-effective component of the energy mix.

Coal-based power generation was split between local and imported sources, with local coal contributing 10.91 percent and imported coal accounting for 14.38 percent of the total output. Furnace oil, while representing a smaller share of the overall generation at 1.42 percent, still incurred costs amounting to Rs10.77 billion.

Furthermore, the application noted that nuclear power sources contributed 10.10 percent to the grid, maintaining a lower fuel cost profile at Rs3.02 per unit. The data also revealed that approximately 31 million units of electricity were generated using diesel during the month, a source that proved to be particularly expensive, with generation costs recorded at Rs54.47 per unit.

The upcoming hearing serves as a critical juncture for both the power sector and the public, as it will determine whether the requested increase is justified based on the actual fuel costs reported by the CPPA. The outcome of this regulatory review will directly affect the monthly electricity bills of millions of households and industrial consumers across the country.

As the energy sector continues to grapple with the high costs of imported fuels and the logistical challenges of maintaining a diversified generation portfolio, the transparency of these monthly adjustments remains a focal point for economic policy.

The CPPA’s request underscores the ongoing pressure on the national power infrastructure to balance generation costs with the affordability of electricity for the general population. Stakeholders and consumer representatives are expected to participate in the upcoming hearing to voice concerns regarding the potential inflationary impact of the proposed tariff hike on the broader economy.

The final decision by Nepra will be pivotal in shaping the energy pricing landscape for the coming month, reflecting the delicate balance between operational cost recovery and the necessity of maintaining accessible energy for all sectors of society.