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Business Recorder
4 days ago
- Business
- Business Recorder
PMO asks PD for recovery-based loadshedding update
ISLAMABAD: The Prime Minister's Office (PMO) has sought an update from the Power Division on its proposed policy to legalize recovery-based loadshedding, amid continued penalties imposed by the National Electric Power Regulatory Authority (Nepra) on Distribution Companies (Discos) and K-Electric for implementing such load management practices in violation of regulatory laws. This initiative is part of a broader reform agenda assigned to the Power Division by the Prime Minister, aimed at removing legal barriers to unscheduled power load shedding across the country. However, the Ministry of Finance (MoF) has expressed reservations about the plan. It argues that while load shedding may help avoid high electricity costs in low-recovery areas, the government remains liable for capacity payments on unutilized electricity—making the overall economic rationale questionable. HCSTSI condemns HESCO over increased load-shedding At a public hearing on Fuel Cost Adjustment (FCA) last year, Nepra Chairman Chaudhry Waseem Mukhtar confirmed that revenue-based load shedding is currently illegal, which is why the regulator is penalizing utilities for enforcing it. He suggested that the government must legalize the practice if it intends to continue its implementation. Following the Chairman's remarks, the Power Division began drafting a proposal titled 'Amendments in Legal Framework to Implement Economic Load Management in the Country.' The proposal aims to embed recovery-based and Aggregate Technical and Commercial (AT&C) loss-based load shedding into the legal and regulatory structure. According to the Power Division, Prime Minister Shehbaz Sharif chaired a series of meetings on April 15, 18, and 25, 2024, during which he directed the division to review and suggest necessary amendments to existing laws and policies. A committee comprising representatives from the Private Power and Infrastructure Board (PPIB), Central Power Purchasing Agency (CPPA), Law Division, Nepra, and independent legal experts was formed to carry the initiative forward. The Power Division circulated a draft summary to relevant ministries for feedback before submitting it to the Economic Coordination Committee (ECC), Cabinet Committee on Energy (CCoE), or the federal cabinet for approval. In its feedback, the Finance Ministry noted the summary lacked empirical data to substantiate the claimed benefits. It stressed that while load shedding in high-loss areas may be justifiable to an extent, the fiscal impact of paying for idle generation capacity remains a major concern. The Power Division, however, maintains that Discos are compelled to implement load shedding in high-loss areas due to economic constraints. With rising electricity costs from the central power pool, continuing to supply expensive power to areas with poor recoveries is financially unsustainable. Therefore, it argues, a structured and legally sanctioned load shedding mechanism is essential for the sector's financial viability. Nevertheless, sources suggest that Nepra remains opposed to the proposed amendments and has raised serious objections. The Finance Division reiterated its stance, emphasizing the need for the Power Division to present a detailed comparative analysis of the economic trade-offs involved. The Cabinet has asked the Power Division to clearly explain the advantages of such a policy, particularly in terms of cost avoidance and system sustainability. Copyright Business Recorder, 2025
Business Recorder
23-05-2025
- Business
- Business Recorder
Power generation rises — but at what cost?
Finally, there is some surge in power generation (read: consumption). It increased by 22 percent year-on-year in April 2024 to reach 10,513 GWh, almost matching the reference generation level. Multiple factors are contributing to this increase. One reason is the reduction in the power tariff for the April–June period, which is encouraging higher consumption from the grid. Another factor is the shift of captive power consumers to the grid, as gas has become prohibitively expensive for them. The third contributor is higher-than-usual temperatures in April, which drove up air-conditioning demand. However, the increase in generation is primarily from expensive imported sources. RLNG-based generation rose by 10 percent year-on-year and was 42 percent higher than the reference generation. Imported coal-based generation jumped to 1,054 GWh from almost zero in April last year—115 percent higher than the reference. In contrast, cheaper indigenous sources saw a decline. Nuclear power generation fell by 8 percent year-on-year and was 22 percent below the reference, while hydropower increased by 11 percent year-on-year but still lagged 29 percent behind the reference level. As a result, the Fuel Cost Adjustment (FCA) turned positive in April 2025 for the first time in nine months, rising by Rs1.27 per unit to Rs8.95 per unit. The key questions now are: How sustainable is this increase in power generation? And why is the generation mix skewed toward more expensive sources? The power tariff reduction includes components that are expected to continue into the next fiscal year. One such component is the Tariff Differential Subsidy (TDS), which may persist due to higher petroleum levies. Another is the Quarterly Tariff Adjustments (QTA), including concessions from IPPs, which are likely to be incorporated into the next year's base tariff. Overall, the reduction in tariffs is expected to persist and should continue to incentivize higher grid-based consumption. This trend is also prompting captive power users to transition to the grid. Captive plants used 110,000 bbtu of gas annually; at 40 percent efficiency, that equates to 12,907 GWh. If 50 percent of that demand shifts to the grid, it could increase monthly consumption by around 500 GWh. This appears to be happening and may continue. Household consumption is closely tied to weather patterns. The national average temperature in April 2025 was 27.9°C—significantly higher than the long-term average of 24.5°C—ranking as the second highest April temperature in 65 years. There may be fluctuations in air-conditioning demand in the coming months depending on weather variations, though temperatures in May 2025 have continued to rise. Industrial demand, on the other hand, is expected to remain elevated through FY26. As for the second question—why the merit order was distorted and why increased generation came from costlier fuels—sources indicate that nuclear generation in the south was constrained due to technical issues and was replaced by imported coal. In the north, lower hydel generation—caused by reduced water availability—was partially offset by increased reliance on RLNG. Furthermore, excessive RLNG usage may be linked to surplus volumes of must-import RLNG, as captive consumers have begun shifting away from it. Hydel generation is likely to remain weak this season, while RLNG consumption may stay elevated. This will continue to exert upward pressure on FCA, potentially offsetting the benefit from lower QTA and TDS. Copyright Business Recorder, 2025
Business Recorder
23-05-2025
- Business
- Business Recorder
March 2025: Nepra may approve Rs3.50 negative adjustment
ISLAMABAD: The National Electric Power Regulatory Authority (NEPRA) is likely to approve a negative adjustment of Rs 3.50 per unit for consumers of Karachi for March 2025. This comes after accounting for a pending amount of approximately Rs 3 billion related to partial load, open cycle operations, degradation curves, and startup costs. In its petition, K-Electric (KE) had initially proposed a refund of Rs 6.792 billion against the billing for March 2025. However, if the Rs 3 billion adjustment is approved, the net refund to consumers will amount to Rs 3.8 billion. The NEPRA, comprising Chairman Waseem Mukhtar and other members, presided over a public hearing marked by a heated exchange. Member (Technical), Rafique Ahmad Shaikh, sharply criticised KE CEO Syed Moonis Abdullah Alvi for failing to provide electricity even in high-theft areas, despite the widespread use of illegal connections (commonly referred to as kunda). March FCA: KE seeks Rs5.02 interim negative adjustment Member Shaikh rejected the CEO's proposal that NEPRA should issue a public appeal urging Karachi residents to pay their bills in exchange for guaranteed electricity supply. Karachi consumers present at the hearing complained about rampant unscheduled load shedding during the summer and inflated electricity bills, questioning why NEPRA had not yet penalized KE. Responding to a question regarding electricity theft and the measures being undertaken to combat it, Moonis Alvi, CEO of K-Electric, emphasized that the utility remains fully committed to curbing power theft through all necessary actions. However, he noted that these efforts are often met with violent resistance from those involved in such illegal activities. The KE staff and infrastructure continue to face serious threats, with recent incidents in P&T Colony and Nazimabad highlighting the severity of the situation—where even law enforcement agencies struggled to safely extract KE personnel from mob attacks. Member Shaikh was unconvinced, questioning the pattern of power cuts. 'Are connections cut for just three hours, and power resumes afterward? Why is there no load shedding during winter months?' he asked. Shaikh, who is also a member of the Sindh government and resides in Karachi, expressed skepticism about the official narrative. Alvi reiterated his request for the NEPRA to publicly urge citizens to pay their bills to avoid disconnections, but Shaikh dismissed the suggestion as 'childish,' adding that the actual condition of KE's distribution network is far worse than portrayed. Tanveer Barry, a representative from the Karachi Chamber of Commerce and Industry (KCCI), also raised concerns. He said KE had requested NEPRA to allow adjustments for previously unaccounted actual fuel costs from prior months. 'If this adjustment is approved, the full benefit of the Fuel Cost Adjustment (FCA) will not be passed on to consumers,' Barry noted. He highlighted operational inefficiencies in KE's system, pointing to high startup and standby times for multiple generating units—symptoms of poor load management and frequent cycling that increase per-unit fuel costs. Barry further emphasized that many of KE's older plants have poor heat rates and low thermal efficiency. A heavy reliance on expensive re-gasified liquefied natural gas (RLNG) and occasional use of high-speed diesel (HSD) have also inflated generation costs. Copyright Business Recorder, 2025
Business Recorder
14-05-2025
- Business
- Business Recorder
March FCA: KE seeks Rs5.02 interim negative adjustment
ISLAMABAD: K-Electric has requested a provisional negative adjustment of Rs5.02 per unit under the Fuel Cost Adjustment (FCA) mechanism for March 2025, which would result in a refund of Rs6.792 billion to its consumers. According to the National Electric Power Regulatory Authority (NEPRA), KE submitted in its calculation sheet (Note-2) that, following the determination of generation tariffs for its power plants post-June 2023, it has provided data related to partial load, open cycle operations, degradation curves, and startup costs. KE has sought approval for Rs15.6 billion covering the period from July 2023 to March 2025. Out of this amount, the Nepra has already set aside Rs9.6 billion in its FCA decisions for the months of November 2024 to January 2025. Feb FCA: Nepra indicates Rs3.64 relief The KE has also requested that the Nepra consider adjusting the accumulated actual fuel cost variations—specifically related to partial load, open cycle operations, degradation, and startup costs—from the negative fuel cost variation pool. This, KE argues, would ensure that consumers are not burdened with these costs at a later stage. The NEPRA has scheduled a public hearing on May 22, 2025 to deliberate on the proposed adjustment. For deliberation during the hearing, following issues have been framed which are as (i) whether the requested FCA is justified; (ii) whether KE has followed the merit order while giving dispatch to its power plants as well as power purchases from external sources; and (iii) whether the request of KE to consider adjustment of accumulated actualisation of fuel cost on account of partial load, open cycle and degradation curves along with startup cost from July to December 2024, from the negative fuel cost variation is justified? All the interested/affected parties have been invited to submit written/oral comments or objections as permissible under the law at the hearing. Copyright Business Recorder, 2025
Business Recorder
30-04-2025
- Business
- Business Recorder
Reduced hydropower, costly fuels: Govt warns of potential hike in power bills
ISLAMABAD: The government on Tuesday warned of a potential hike in electricity bills during the summer months, citing reduced hydropower generation and greater reliance on expensive fuels — despite marginal negative adjustments under the Fuel Cost Adjustment (FCA) and Quarterly Tariff Adjustment (QTA) mechanisms. This was revealed by officials from the National Power Control Centre (NPCC) and Central Power Purchasing Agency – Guaranteed (CPPA-G) during public hearings held by the National Electric Power Regulatory Authority (Nepra) on FCA for March 2025 and the QTA for the third quarter of FY2024-25 (January–March). Nepra officials stated that the QTA is expected to result in a negative adjustment of Rs 1.52 per unit, applicable during May, June, and July 2025. Energy sector reforms: Govt makes new commitments to IMF Discos have sought a total reduction of Rs 51.493 billion, of which Rs 47.124 billion stems from lower capacity charges — Rs 16 billion due to contract terminations and Rs 17 billion through revised agreements with Independent Power Producers (IPPs). This adjustment will also apply to K-Electric consumers. Total savings from revised and terminated pacts was around Rs 91 billion as of now. For March's FCA, a negative adjustment of 3 paisa per unit has been requested, with an overall financial impact of Rs 250 million. However, when combined with the 90 paisa per unit already approved for April through June 2025, the net relief to consumers will be limited to 50 paisa per unit — excluding lifeline consumers. The actual reference fuel cost for March stood at Rs 9.2251 per unit, compared to a reference FCA of Rs 9.2560 per unit. CPPA-G CEO Rihan Akhtar confirmed that if the Rs 3.291 billion Prior Year Adjustment (PYA) had not been included, the FCA would have resulted in a higher positive impact on consumer bills. The NPCC General Manager assured that power generation would remain sufficient due to fuel availability, but noted that FCA costs will rise due to the use of more expensive fuels. The CPPA-G stated that there was 6 per cent reduction in electricity demand in March 2025 as compared to reference month of 2024, however a growth of 6 per cent has been witnessed in March as compared to February 2025. The NPCC noted that it transmitted 8.70 percent less energy in March as compared to the same month of 2024. It also shared details of routine outages and forced outages in the month due to which expensive plants were operated. During the session, Arif Bilwani and Amir Sheikh raised questions regarding fuel allocation, future power generation plans, and industry concerns. Sheikh criticized the lack of benefit to the industrial sector despite freeing up indigenous gas following the forced shift of captive power plants to the national grid. He demanded clarity on where this gas has been redirected and called for an increase in FPA refunds to industry. Bilwani said sarcastically that the government's officials should also apply their minds instead of totally depending on Allah's kindness. The hearing also saw Nepra Chairman Waseem Mukhtar express strong displeasure over the absence of senior officials from the Power Division and three key distribution companies—HESCO, MEPCO, and PESCO. He instructed Nepra staff to summon explanations from their CEOs and to issue a formal letter to the Secretary Power. 'If this QTA hadn't been negative and in favor of consumers, I would've returned the petitions filed by the Discos. Unfortunately, this is the culture we live in,' the Chairman remarked. Amir Sheikh urged that the QTA be implemented starting April to fulfill commitments made by the Prime Minister. 'If the relief starts in May, the rate reduction promised by the PM won't be realized,' he said. Tanveer Barry of the Karachi Chamber of Commerce and Industry (KCCI) highlighted poor performance of Discos in curbing theft and bill recovery. He noted that Pakistan's circular debt reached Rs 2.4 trillion in FY24—2.3% of GDP—while transmission and distribution losses for Discos and K-Electric were 20.1% and 16%, respectively. Barry also criticized the government's consideration of new commercial loans to reduce circular debt, warning that the burden would ultimately fall on law-abiding consumers. 'Electricity in Pakistan remains more expensive than in other regional countries. We need to begin working on lowering the base tariff for the next fiscal year — this three-month relief isn't enough,' he concluded. Copyright Business Recorder, 2025
