Power division, industry seek fuel levy cut to ease power costs

• CPPA seeks Rs2. 56 per unit additional fuel cost adjustment to recover Rs33bn • Industrial representatives insist fuel levies inflating generation costs ISLAMABAD: The manufacturing sector and the power division on Thursday unanimously called for the removal or reduction of the petroleum levy on furnace oil and diesel used for power generation, stressing that it was resulting in about Rs10 per unit additional impact to electricity costs. The demand emerged during a public hearing on the Rs2. 56 per unit additional monthly fuel cost adjustment (FCA) sought by power companies to recover about Rs33 billion for electricity consumed in September. The National Electric Power Regulatory Authority (Nepra) conducted the hearing on a request by the Central Power Purchasing Agency (CPPA) to allow distribution companies to charge the additional FCA in November bills.

A government official said the proposed adjustment was the highest for comparable months in recent years. Industrial representatives Amir Shaikh, Arif Bilwani, Tanveer Bari and Rehan Javed, representing various chambers of commerce and industry, said the government was charging substantial petroleum levies — about Rs76,000 per tonne on furnace oil and Rs80 per litre on diesel — which could otherwise be reduced to lower generation costs amid the energy crisis arising from the Iran conflict. Representatives of entities under the power division confirmed that furnace oil- and diesel-based generation accounted for 3. 6 per cent of total power generation in September because of the unavailability of liquefied natural gas (LNG) and other cheaper sources. Industrial representatives said removing the levies could reduce generation costs from around Rs62 per unit to Rs44-50 per unit. They argued that the levy was also…