Latest news with #QuarterlyTariffAdjustment
Business Recorder
13-05-2025
- Business
- Business Recorder
Power tariffs: Summer relief extends
The summer season of massive relief continues for electricity consumers, as another Rs1.55/unit cut in lieu of Quarterly Tariff Adjustment (QTA) has been notified by the regulator. The QTA for 3QFY25 will be in field for May, June and July QTA for May and June will be in addition to the 2QFY25 QTA amounting to Rs1.9/unit – that is already in place till June 2025. The combined relief over March 2025 now stands at Rs6.2/unit for protected category slabs, and nearly Rs5/unit for unprotected. The impact includes negative monthly fuel charges adjustment of Rs1.18/per unit, of which Rs0.9 is the temporary adjustment that will last another month. The standalone monthly FCA at Rs0.28/unit for May 2025 is the lowest since September 2024, as deviations with reference generation have increased of late – largely owing to reduced hydrology and increased reliance on RLNG. The tariff composition has a number of temporary relief heads when compared with March 2025. This is what is in field. Tariff Differential subsidy (TDS) of Rs1.71/unit for April-June, 2QFY25 QTA of negative Rs1.9/unit for Apr-Jun, 3QFY25 QTA of negative Rs1.55/unit for May-July, FCA retention relief of negative Rs0.9/unit for Apr-Jun, and Rs0.28/unit on account of monthly FCA for May 2025. The base tariff, surcharges, duties, and taxes, meanwhile, have remained unchanged. From a year ago, the tariff respite is rather considerable, ranging from 9 percent to 48 percent across various slabs. Effective tariffs are down Rs8/unit for protected and nearly Rs6/unit for unprotected consumers year-on-year. Interestingly, the effective tariff for the non-lifeline protected consumer in the lowest category is now lower than the lifeline consumer's highest slab. The difference is marginal, and temporary – as non-lifeline consumers do not get the benefit of periodic adjustments, which have been rather significant of late. Nearly half of the capacity charges reduction for 3QFY25 stemmed from the impact of termination of 5 plants, and renegotiated terms with a number of IPPs. A considerable portion owes to the impact of closure of Neelum Jhelum power plant – which may have led to some savings on account of capacity charges but is a net negative for the sector – as no contribution will lead to a visibly altered reference generation mix for the next annual tariff rebasing exercise. Early signs indicate FY26 base tariffs will be a tad lower or at pat with FY25, and periodic adjustments are expected to be much lower, given the impact of IPP negotiations and terminated contracts will likely be built in the revised Power Purchase Price (PPP) for FY26. All eyes are now on the hydel flows which will be key in keeping power tariffs within close proximity of base tariffs for FY26.
Business Recorder
10-05-2025
- Business
- Business Recorder
Inefficiencies hiking capacity charges highlighted
ISLAMABAD: National Electric Power Regulatory Authority (Nepra) Member (Technical) Rafique Ahmad Shaikh has highlighted inefficiencies in the country's transmission system, which resulted in the payment of Rs 69 billion in capacity charges to three coal-fired power plants despite extremely low utilisation and less relief in tariff for March 2025 under monthly FCA mechanism. Shaikh made these observations in his two additional notes; i.e., on the Quarterly Tariff Adjustment (QTA) for the third quarter of FY 2024-25 whereas the second is on FCA adjustment for Discos for the month of March 2025. He also wrote a third additional note on delay in interconnection of the KE's system with NTDC due to which consumers of KE are not getting due relief in tariff. As part of this adjustment, Nepra approved a reduction of Rs 1.55 per unit, providing a total financial benefit of Rs 52.6 billion to consumers of power Distribution Companies and K-Electric (KE) in their electricity bills for May, June, and July 2025 whereas a negative adjustment of Rs 0.29 per unit was approved for Discos consumers. For KE, a negative adjustment of Rs 3.64 per unit has been approved. QTA & MTA: Nepra cuts tariffs for Discos and KE According to Shaikh, the capacity claimed by Distribution Companies (Discos) for the third quarter amounted to Rs 362.395 billion, which is significantly lower than the reference figure of Rs 459.286 billion. During the same period, electricity sales stood at 19,968 GWh—down from the reference figure of 21,846 GWh. He noted that typically, a decline in electricity sales leads to an increase in capacity charges due to the fixed-cost nature of these payments. However, this quarter witnessed the termination of certain Power Purchase Agreements (PPAs) and other adjustments related to Independent Power Producers (IPPs), which helped lower the overall capacity payments, resulting in a negative adjustment. Shaikh emphasised that although the quarterly adjustment saw a significant decrease, improved governance and more efficient operations could have further boosted electricity sales and led to an even greater reduction. To this end, he outlined several areas requiring urgent attention:(i) GENCO-II (Guddu Old), GENCO-III (TPS Muzaffargarh), and GENCO-I (Jamshoro Power Company Limited) collectively claimed Rs 1.237 billion in capacity payments— Rs 469 million, Rs 350 million, and Rs 418 million, respectively— despite generating no electricity during the quarter. These plants suffer from high generation costs and low operational efficiency, and are unlikely to receive dispatch orders in the future due to the availability of surplus, lower-cost capacity in the system. Continued payments to these non-operational units place an undue burden on the power sector and end consumers. A strategic review is essential to rationalise these expenditures and enhance sectoral efficiency; and (ii) transmission constraints are also severely limiting the utilisation of several efficient and cost-effective power plants in the southern region, including Port Qasim, China Power, and Lucky Electric. These plants reported utilisation factors of just 1%, 10%, and 0%, respectively, yet collectively claimed Rs 69.09 billion in capacity charges— Rs 26.95 billion for Port Qasim, Rs 30.88 billion for China Power, and Rs 11.26 billion for Lucky Electric. 'Such inefficiencies highlight the urgent need to address transmission bottlenecks and reform dispatch practices to ensure optimal use of the country's available low-cost power generation resources,' he added. Additional Note on FCA: In his additional note on Disco's FCA's determination for the month March 2025, he said serious efforts are being made across various forums to reduce electricity costs, several persistent issues— especially poor governance— continue to drive up electricity prices in Pakistan. The following key challenges have been outlined to help guide relevant stakeholders toward building a more efficient and sustainable power sector: (i) power generation in March 2025 was 8.5% below the reference level, partly due to AT&C-based load shedding. This AT&C based load shedding not only worsens public hardship but also results in underutilisation of 'Take or Pay' power plants, driving up costs. In March 2025, 'Take or Pay' thermal power plants, with a total capacity of 20,248-MW, operated at only 34.29% utilisation. Enhancing governance at the Disco level is essential to effectively eliminate aggregate Technical and Commercial losses; (ii) the continued outage of Steam Turbine Unit 16, ongoing since July 2022, at the Guddu 747-MW Power Plant resulted in Rs. 0.68 billion in losses for March 2025, raising total losses for FY 2024-25 (up to March) to Rs. 6.41 billion; (iii) operating the Guddu 747MW power plant in open cycle mode led to reduced output from this cost effective source, requiring the shortfall to be met through more expensive, marginal-cost plants. This shift added Rs 24 billion in extra costs in March 2025 alone, with total additional costs reaching Rs. 110 billion during FY 2024-25 (up to March). Progress on resolving the damaged steam turbine issue requires accelerated efforts; (iv) Neelum Jhelum 969MW hydropower plant has been out of operation since May 2024. Its non-availability in March 2025 forced reliance on costlier alternatives, resulting in an additional Rs. 4.5 billion in costs compared to March 2024. The total financial impact for FY 2024-25 (up to March) has reached Rs. 28 billion. Resolving the issue requires more concerted and focused efforts; (v) the HVDC infrastructure operated at only 32% utilisation in March 2025, while consumers continued to bear full capacity charges. Among other factors, a key reason for this underutilisation is the delayed completion of the Lahore North Grid Station. Efforts must be intensified to complete the task without any further delay; (vi) Transmission and grid system constraints led to losses of Rs. 0.62 billion in March 2025, bringing the cumulative impact to Rs. 12.31 billion for FY 2024-25 (up to March). Efforts should be intensified to quickly remove transmission constraints that are harming the sector's financial viability; and (vii) Part Load Adjustment Charges (PLAC) amounted to Rs. 2.6 billion in March 2025, bringing the total to Rs. 29.8 billion for FY 2024-25 (up to March). These charges are expected to rise further, as PLAC schedules for some power plants are still being finalized. A study should be conducted to reduce PLAC through effective demand-side management. He further stated that March 2025 FCA includes a negative prior period adjustment of approximately Rs. 3.29 billion. Excluding this, the FCA would have reflected a positive adjustment of Rs. 0.37/kWh. Prior period adjustments, whether positive or negative, are undesirable. To minimise their occurrence and impact, invoicing, verification, and adjustment processes should be improved, with any such adjustments limited to a maximum period of not more than two months. KE's FCA for February 2025: Member (Technical) stated that the successful enhancement of the interconnection between K-Electric and the National Transmission and Despatch Company (NTDC) to a safe operating limit of 1,600MW is a commendable step. However, efforts to further increase this capacity to 2,000MW and beyond— originally targeted for completion by June 2024— remained incomplete. In February 2025, the fuel cost in KE's generation mix stood at Rs. 20.01/kWh, significantly higher than NTDC's average of Rs. 8.23/kWh. 'If the interconnection capacity had been upgraded as planned, increased reliance on NTDC's lower-cost surplus power could have further reduced the Fuel Cost Adjustment, easing the financial burden on consumers,' he said adding that in light of the current surplus of economical generation within the NTDC system and the high cost of KE's internal generation, it is imperative that the interconnection upgrade be completed without further delay. Copyright Business Recorder, 2025
Business Recorder
10-05-2025
- Business
- Business Recorder
QTA & MTA: Nepra cuts tariffs for Discos and KE
ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) on Friday announced a reduction in electricity tariffs for both Distribution Companies (Discos) and K-Electric under its quarterly and monthly adjustment mechanisms. For the third quarter of FY 2024-25, Nepra approved a tariff reduction of Rs 1.55 per unit under the Quarterly Tariff Adjustment (QTA) mechanism for all Discos and KE. Additionally, under the Fuel Charges Adjustment (FCA) mechanism, a Rs 3.64 per unit reduction was approved for KE for February 2025 and a Rs 0.29 per unit decrease for Discos for March 2025. Nepra issued three separate notifications reflecting these determinations. KE consumers will benefit from a total relief of Rs 5.19 per unit in May 2025, combining both QTA and FCA adjustments. Further reductions for June and July will depend on future FCA data. Discos and KE: Nepra approves Rs1.71 tariff cut on PD's motion Discos consumers will see a combined relief of Rs 1.82 per unit in their May 2025 electricity bills. However, the joint impact of QTA and FCA in the months of June and July will be determined after the Central Power Purchasing Agency – Guarantee (CPPA-G) submits the relevant data. According to the QTA notification, Nepra has approved negative quarterly adjustments totaling Rs 52.603 billion for the third quarter of FY 2024-25. This adjustment will be spread over three months—May to July 2025—at a uniform rate of negative Rs 1.5538/kWh, applicable to all consumer categories except lifeline and prepaid consumers. Regarding KE's FCA, Nepra has approved a provisional negative FCA of Rs 3.6396/kWh, subject to revision once the Multi-Year Tariff (MYT) for FY 2024-30 is finalized. Any differences arising from the MYT determination will be adjusted in future periods. This reduction applies to all consumer categories, except lifeline consumers, protected domestic consumers, Electric Vehicle Charging Stations (EVCS), and prepaid consumers. This adjustment will be reflected separately on consumer bills based on units consumed during the relevant month. If any May 2025 bills were issued prior to the notification, the relief will be incorporated in subsequent billing cycles. As for Discos, Nepra has determined a national average uniform reduction of Rs 0.2883/kWh in the tariff for March 2025 under the FCA mechanism. This reduction, applicable to all consumer categories except lifeline, protected, EVCS, and prepaid consumers, will be reflected in May 2025 bills based on March consumption. Similar to KE, any early billing will be adjusted in future months. 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
Business Recorder
21-04-2025
- Business
- Business Recorder
Pakistan inflation expected to drop further to below 0.5% in April 2025, says brokerage house
Pakistan's headline inflation is expected to continue its declining trend and drop further to below 0.5% in April 2025, as per a report by brokerage house Topline Securities. Inflation in the country stood at 59-year low of 0.7% on a year-on-year (YoY) basis in March 2025, a reading below that of February 2025 when it stood at 1.5%, showed Pakistan Bureau of Statistics (PBS) data. 'Pakistan's Consumer Price Index (CPI) for Apr 2025 is expected to bottom out and clock in below 0.50% YoY. The inflation is expected to remain in range of 0.05% to 0.5% YoY (-0.8% MoM,) taking 10MFY25 average to 4.87% compared to 26.22% in 10MFY24,' Topline said. 'The inflation is expected to be lower due to significant fall in food and electricity prices.' It may be noted that inflation reading in Pakistan rose to a record 38% on a year-on-year basis in May 2023, the highest level since data was made available beginning July 1965. During Apr 2025, as per the report, food inflation is expected to decrease by 3.32% month-on-month (MoM) mainly on the 25% decrease in fresh fruit prices, 21% decrease in tomatoes and onion prices and 19% decrease in prices of eggs. While prices of milk, meat, spices and pulses are expected to rise by merely 0.2% on average. Housing, water, electricity and gas segment is expected to witness approx. a fall of 0.02% MoM due to decrease in electricity by 6.8%, and 0.5% decrease in solid fuel (wood) prices. 'However, this negative impact is likely to offset by 1.8% increase in rent. We have assumed fuel cost adjustment of negative Rs1.36/Kwh, Quarterly Tariff Adjustment (QTA) of negative Rs1.9, and PDL [Petroleum Development Levy] led incentive of negative Rs1.71.' Transport segment is expected to also witness a fall of 0.12% MoM on the back of a 0.4% fall in fuel prices. 'We have arrived at our inflation estimates using avg. of SPI data of week ending Apr 10 and 17 (as cut-off is 11-14 of month). However, with SPI [Sensitive Price Indicator] reading of only Apr 17, 2025, the CPI reading turns negative, showing deflationary trend, falling in range of -0.25% to 0.25% YoY,' Topline said. For FY25, the brokerage house revised down its inflation forecast from 5-6% to 4.5-5.5% 'owing to falling electricity prices, oil prices and food prices'. 'We will issue more details on this and on other indicators in our quarterly economy report, to be released in end Apr 2025,' the report said.
