Discos Request Higher Fuel Cost Adjustment for April Bills

Power companies in Islamabad have requested an additional fuel cost adjustment (FCA) for April bills, seeking Rs1.64 per unit from the current rate of Rs1.63. This request is due to increased demand and higher fuel costs associated with power consumption in February.

The Central Power Purchasing Agency (CPPA) has demanded this increase despite more than 75% of power generation coming from domestic sources that are cheaper. Electricity consumption was reported to be about 11.42% higher than the same month last year, but it was 15% lower compared to January 2026.

If approved, the additional charge would amount to approximately Rs12.2 billion for consumers across all power companies, including ex-Wapda Distribution Companies (Discos) and K-Electric. The National Electric Power Regulatory Authority (Nepra) has scheduled a public hearing on March 31 to discuss this request for additional FCA charges.

The CPPA filed a petition for higher FCA for February consumption. Power companies claimed an average fuel cost of Rs8.37 per unit in February, compared to Rs8.23 per unit last year. The CPPA reported that 7,427 billion units (gigawatt hours) were delivered to Discos in February, down from 8,762 GWh in January.

The power companies stated that the average fuel cost amounted to Rs8.37 per unit in February against a pre-approved reference fuel cost of Rs6.74 per unit, necessitating an additional FCA of about Rs1.64 per unit. The CPPA noted that 7,696 GWh of electricity was generated in February at an estimated fuel expenditure of Rs62.75 billion (Rs8.15 per unit), with 7,427 GWh delivered to Discos at a cost of Rs62.2 billion (Rs8.37 per unit).

Hydropower remained the dominant fuel source, contributing over 23% after annual canal closures in December and January, but it was below its full potential compared to 8% in January. Nuclear power accounted for 18.83% in February, up from 17.5% in January when some plants were under forced outage or refueling.

Local coal-based power generation contributed 16%, followed by imported coal at nearly 15%. Local gas made up 11.52%, while regasified liquefied natural gas (RLNG)-based generation was 9.47%, a sharp decline from 22% in January. There were no furnace oil or diesel-based generations in February, unlike the previous month when 3% came from furnace oil.

RLNG-based generation was the most expensive at Rs23.21 per unit, followed by imported coal at Rs13.56, local coal at Rs13.5, and local gas at Rs12.22 per unit. Nuclear fuel cost stood at Rs2.50 per unit in February, up from Rs2.23 in January and Rs1.82 last year.

The three renewable energy sources — wind, bagasse, and solar — together contributed 5.63% to the grid. Wind and solar have no fuel cost, while bagasse-based plants recorded a fuel cost of Rs10.39 per unit, with a 1.19% share, almost double the Rs5.96 per unit in February last year. Electricity imports from Iran accounted for 0.45% of the total at a fuel cost of Rs23.21 per unit.

Under a federal government decision, the FCA will also apply to K-Electric consumers starting June 2025. The FCA is reviewed monthly based on the tariff regime and usually applies only to one month’s bills. Quarterly adjustments for variations in power purchase price, capacity charges, operation and maintenance costs, system use charges, and transmission and distribution losses are built into the base tariff by the federal government.