Amid a government request for roughly Rs36.52 billion in additional recovery from power consumers in September to cover expensive LNG imports, and a similar burden expected the following month, the National Electric Power Regulatory Authority (NEPRA) announced Thursday that it would reject any special tariff incentive package finalised without proper consultation with industry.
At a public hearing conducted by NEPRA members Maqsood Anwar Khan, Amina Ahmed, and Ghulamullah Shaikh, Central Power Purchasing Agency (CPPA) CEO Rehan Akhtar said the primary driver behind the Rs2.52 per unit rise in fuel costs in July was record-high RLNG spot market purchases, made necessary after contracted cargoes from Qatar failed to arrive due to the closure of the Strait of Hormuz.
Several participants questioned coal imports by power producers, particularly the Port Qasim Power Plant, alleging they were unnecessarily burdening consumers, and called on the regulator to introduce a fairer, more transparent procurement mechanism. Industrial representatives, largely from Karachi, reiterated that the industrial support package tied to incremental consumption was flawed, since it failed to benefit most industries and had remained unchanged for nine months despite an earlier promise to review it after six.
They also raised concerns about the tariff rebasing introduced on January 1, arguing the benchmarks had been deliberately lowered to shrink the budgeted subsidy, only for fuel costs to subsequently rise, adding an extra Rs206 billion burden on consumers through fuel cost adjustments and quarterly revisions. They noted NEPRA had directed the Power Division to conduct an incremental tariff review in consultation with industry within six months, a consultation they said had never taken place.
NEPRA Member Amina Ahmad said the Power Division had already submitted its review of the incremental package, but called it unfortunate that industrial consumers still felt unheard. She announced the regulator would not proceed with the review request and would instead return it to the Power Division until it updated its proposal following genuine, comprehensive consultation with industry.
Export of Furnace Oil
Industrial consumers also questioned why furnace oil was being exported at a subsidised rate even as the government levied a substantial petroleum tax on its domestic use, arguing there was no justification for export given that the price gap between RLNG and furnace oil amounted to just Rs3 per unit despite the levy. They urged that petroleum levy revenue collected on furnace oil be redirected to lower industrial power rates, as originally promised by the prime minister.
Akhtar acknowledged the proposal had merit and was under government consideration, but cautioned it would be difficult to implement given the technical constraints tied to the IMF programme. He said the absence of contracted LNG cargoes had forced greater reliance on RLNG imports to stabilise Punjab’s major power plants, with the remaining shortfall met through increased coal-based generation.
He also said a government decision to stagger refuelling at the Karachi Nuclear Power Plant (K-III) to offset the shortfall had worked against consumer interests, given changed circumstances; the 1,100MW plant is now expected to return to full generation by August 31, rather than undergoing its originally planned shutdown from April 20 to June 20.
The hearing was told that the cost of RLNG-based power generation surged to Rs47.4 per unit in July, more than double the previous month’s level, as costly spot cargoes were arranged following the suspension of Qatari supplies amid the US-Iran war. Akhtar warned that the situation is set to worsen further, with RLNG prices climbing nearly a third higher in August, a rise that will translate into an additional burden on consumers reflected in October billing.
Once approved, power companies, including former WAPDA distribution companies (DISCOs) and K-Electric, would charge consumers an additional Rs36.55 billion collectively in September bills.
