Neelum-Jhelum to resume power generation from July

ISLAMABAD: The 969-megawatt Neelum Jhelum Hydropower Project would get back to power generation by July after a year-long closure due to tunnel collapse and K-Electric (KE) is entering into a 10-year agreement with the federal government for enhancing its intake from national grid to 2,600MW.

These were the upshot of the two separate public hearings on increase in fuel charges for the consumers of KE and ex-Wapda Distribution Companies (Discos) conducted by the National Electric Power Regulatory Authority (Nepra) on Thursday but could not reach a conclusive decision.

During the discussion on expensive power generation, Nepra Chairman Tauseef H. Farooqui said the Neelum-Jhelum Hydropower Project was expected to come back into production in July — almost a year after it was abruptly closed because of tunnel collapse.

Representatives of the Central Power Purchasing Agency (CPPA) told the hearing that the power generation cost was higher than the reference cost due to the lower availability of hydropower generation as the 969-MW plan remained closed.

KE to sign pact with Centre for 2,600MW

The KE representatives also reported that they were in the process of entering into an agreement for 2,600MW from the national grid. Of this, 1,000MW would be on a firm basis and the remaining 1,600MW on an as-and-when-available basis. At present, the KE is drawing about 1,100MW from the national grid but without any legal cover for over half a decade.

The Nepra members noted that certain higher cost impacts were also because of transmission system constraints. At the conclusion, the regulator noted that there would be zero increase in the FCA for Discos and somewhere between 56 paise to Rs1.07 per unit increase in FCA for KE.

Nepra said the Discos’ FCA could be increased but a final decision would be notified next week after verification of certain evidence and transmission constraints.

The hearings were told that Discos and K-Electric had demanded permission to charge about Rs8.5bn additional fuel cost to their consumers at the rate of about 86 paise and Rs1.66 per unit, respectively, in April for electricity consumed in February.

The increase in FCA is even though the base average tariff has gone up by more than Rs7 per unit and reduction in the cost of import fuels like furnace oil and liquefied natural gas.

The biggest contribution to the overall national power grid came from hydropower generation at 26.46pc in February followed by 24.28pc from nuclear power plants. Hydropower has no fuel cost. The third largest generation share in the national power grid came from LNG-based electricity at 18.86pc, followed by 14.07pc from coal and about 11pc from domestic natural gas.

Interestingly, the fuel cost of furnace oil-based power generation at Rs21.67 per unit was lower than the Rs23.36pc fuel cost of LNG-based power generation. However, the authorities produced just 1.39pc share from furnace oil-based generation compared to 18.86pc from LNG.

The CPPA claimed on behalf of Discos that the consumers were charged a reference fuel cost of Rs7.21 per unit in February, but the actual cost turned out to be Rs8.07 per unit, hence an additional charge of 86 paise per unit.

The cost of power generation from domestic gas slightly came down to 10.07 per unit when compared to Rs10.5 per unit in December. The furnace oil-based power generation cost stood at almost Rs21.67 per unit significantly down from Rs34 per unit a few months earlier mainly because of a decline in international oil prices. Coal-based power generation cost, on the other hand, increased to Rs12.57 per unit when compared to Rs11.5 per unit in December 2022.

Three renewable energy sources — wind, bagasse and solar — together contributed about 3.54 pc, down from about 4.54pc a month earlier. Wind and solar have no fuel cost, while that of bagasse has been calculated at Rs5.35 per unit.