The National Electric Power Regulatory Authority (NEPRA) held a public hearing on Thursday, during which it reserved its decision on a request by the Central Power Purchasing Agency (CPPA). The request aims to reduce electricity tariffs by Rs0.57 per unit for August 2024, under the Fuel Charges Adjustment (FCA). This potential reduction follows a previous Rs0.37 per unit cut applied in July 2024. The decision is yet to be finalized, as NEPRA reviews the data provided by CPPA before making an official announcement.
Hearing Overview
NEPRA Chairman Waseem Mukhtar led the hearing, which took place at NEPRA’s headquarters. The focus was on CPPA’s proposal to pass on the Rs0.57 per unit reduction to consumers. However, this adjustment will not apply to specific categories, including lifeline consumers, electric vehicle charging stations, or K-Electric (KE) customers. After a detailed hearing and review, NEPRA plans to make a formal decision and notification based on the data provided by CPPA.
Decline in Electricity Demand
During the hearing, CPPA officials disclosed several key facts about electricity usage in August. A total of 12.75 billion units of electricity were sold, but there was a 20% drop in consumption compared to previous months. This decline raised concerns within NEPRA, with officials suggesting that high electricity costs were the main factor behind the reduced demand. Both the industrial and agricultural sectors have significantly cut back on their electricity usage due to rising prices.
Electricity Generation Breakdown
The data presented by CPPA revealed that in August, 21% of electricity generation was powered by imported coal, while 73% relied on local coal sources. The range of electricity generation during the month fluctuated between a minimum of 11,981 megawatts and a peak of 23,200 megawatts.
NEPRA’s Concerns Over Rising Costs and Declining Demand
NEPRA members expressed deep concerns over the declining electricity demand. Member Matar Niaz Rana noted that the rising electricity costs are severely impacting demand, particularly within the industrial sector. NEPRA Chairman Waseem Mukhtar emphasized that the high prices are a significant factor contributing to the reduction in electricity usage, especially in industries where energy is a major operational cost.
Impact on Industrial Sector
NEPRA member Rafiq Sheikh pointed out that many industrial units have either scaled down or completely halted their operations due to the unaffordable electricity costs. This reduction in industrial activity has, in turn, led to a decrease in overall electricity demand. Several industry representatives who attended the hearing confirmed that many factories are struggling to keep up with the high energy bills, forcing them to shut down or reduce their production levels.
Financial Support Suggestions
Maqsood Anwar, another member of NEPRA, proposed that providing financial support to industries might help stabilize or even boost electricity demand. However, Rafiq Sheikh expressed concern that as demand continues to decline, quarterly adjustments in electricity prices will likely increase. This could place additional financial pressure on general consumers, making it even harder for industries to manage costs and maintain operations.
Sahiwal Coal Power Plant’s Reduced Capacity
CPPA officials also reported significant issues with the Sahiwal Coal Power Plant, which has been operating at reduced capacity for the past three months. This underutilization has led to substantial financial losses, with the plant incurring Rs5.30 billion in losses in June, Rs4 billion in July, and Rs1.5 billion in August. The reduced capacity of the plant has only worsened the financial strain on the already burdened power sector.
Solar Power and Shifting Demand Patterns
In addition to coal-based electricity generation, power division officials mentioned that 13,000 megawatts of solar power had been imported over the past seven months. While this shift towards renewable energy is a positive development, it has not been enough to offset the decline in demand, particularly from the industrial sector. Solar power generation, while growing, has not been able to fully compensate for the losses caused by reduced electricity consumption in other sectors.
NEPRA’s Final Decision Awaited
NEPRA has reserved its final decision on CPPA’s request and is thoroughly reviewing the data before making any formal announcement. The decision is expected to have significant implications for both consumers and industries, particularly in terms of electricity pricing and demand. NEPRA will issue a formal notification regarding the Fuel Charges Adjustment (FCA) for August 2024 once the review is complete.
Conclusion
The reduction in power tariffs by Rs0.57 per unit, if approved, could provide some relief to consumers amid rising electricity costs. However, the broader issue of declining electricity demand, especially in the industrial sector, remains a critical concern. NEPRA final decision will be closely watched, as it could impact both the power sector’s financial stability and the ability of industries to continue their operations. The ongoing decline in electricity consumption, coupled with rising prices, highlights the need for a balanced approach that supports both consumers and industries while ensuring the sustainability of the power sector.
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