23/08/2022
Just like when you get more than expected marks in an exam, even after looking carefully at the result card, you can't believe that it is your result, the same is the case after the electricity bill that comes in August, but this time the surprise is pleasant. no way.
When you look at the electricity bill, you first blame the AC on the wall, or the iron on the table, but then when you look at the units used, it's not much more than last month.
On closer inspection, your eyes fall on the three English letters 'FPA' and you easily make a mistake by reading the amount written in front of it.
Looking at the amount written under FPA i.e. Fuel Price Adjustment, you ultimately blame the current government and not the electrical appliances or any householder for the bill.
Unfortunately, this summer the story has become a household one, and for the past two months, everyone has been budgeting their homes thinking that the electricity bill is due. Not only this, there have also been protests against electricity bills in different parts of the country.
On social media, consumers are criticizing the extraordinary increase in electricity bill prices, but at the same time, electricity bill watchers are also raising questions about the FPA.
So what is this fuel price adjustment, who determines it and how, and is there no choice but to put the burden on the public?
Apart from talking to some experts in this regard, we have also taken help from the announcement issued by ISCO yesterday.
What is a fuel price adjustment?
When we asked Tahir Abbas, Head of Research at Arif Habib Limited, about this, he gave a detailed answer, which is summarized below.
To understand the fuel price adjustment, it is important to understand the actual fuel cost (the cost of fuel in a month) and the reference fuel cost.
At the beginning of every financial year, the National Electric Power Regulatory Authority (NEPRA) issues a reference fuel cost. That is, a reference against which to compare the total cost of fuel each month.
The total cost of fuel used in the production of electricity in a month (basket fuel cost) is calculated based on the cost of fuel (such as coal, LNG, furnace oil) used in different sources of energy in the country. goes
Thus, at the end of each month, the total fuel cost of that month is compared with the reference fuel cost and accordingly this 'adjustment' is added to the electricity bills after two months.
If the total fuel cost in that month is more than the reference cost, then the amount of FPA will increase in your bill, while if the total fuel cost of that month is less than the reference cost, then the amount of FPA will decrease. This is called fuel price adjustment.
How is the fuel price adjustment determined?
"If a power plant uses coal, it will be seen how much coal it used and at what price it was purchased, ie the overall power generation from which energy sources and how much it cost."
For example, if the electricity production by hydel has increased, the overall fuel price will decrease, or if gas is used more in a month, because its price is higher, the fuel price will be higher. .'
He further said that it is also affected by depreciation or appreciation of rupee.
"This is because coal, LNG and furnace oil are imported so a depreciation or appreciating rupee has a direct impact on the overall cost."
According to a statement issued by Isco yesterday in this regard, it also involves the non-availability of cheap fuel for thermal generation.
Why is there a need to include FPA in the bill?
the government used to give subsidies in the form of fuel price adjustment, which led to budget deficits, increased inflation and the government had to take loans.
'Now for the last one year it has been decided to put it in the bill itself, whether negative or positive so that it is adjusted.'
Tahir Abbas says that until a year ago, the cost of fuel was not changing much, but in the last few months, the prices of LNG and coal have started to increase significantly across the world.
However, he said that 'In the coming months, prices are expected to decrease in the global market and the share of hydel in the energy mix will also increase, so the overall fuel cost is likely to decrease.'
He further said, 'The fuel price adjustment is actually taking place with a delay of two months, which means that the fuel price adjustment for the month of June will be seen in the bill for the month of August.
"In the coming months, the overall cost will come down as Hydel's share increases."
What are the taxes on the bill and how much do they add to the bill?
Keep in mind that not only the fuel price adjustment but also various taxes are added to the bill. Ammar Khan and Tahir Abbas point out that these taxes are added to the total value of the bill.
Amar Khan says, 'If you ever look at a bill, 30 to 32 per cent of it is taxes, meaning when your unit price goes up and the fuel price adjustment goes up, your GST goes up because All these things are connected.'
According to the announcement issued by ISCO, the taxes levied on the electricity bill include 17 percent general sales tax, electricity duty and income tax.
ISCO also said that the increase in fuel price adjustment was actually due to costlier furnace oil generation in May-June which will gradually decrease after August.
One thing that the consumer must understand in this discussion is that the fuel price adjustment added to the electricity bill in the month of August is directly related to your electricity consumption in the month of June. I have used more electricity since July, so it is quite possible that the fuel price adjustment on your August bill will be more than your original bill.
'People should collectively refuse to pay electricity bills'
The hike in electricity bills has seen strong reactions on social media and people are questioning the current government as to how they can pay such high bills.
In this regard, pictures of electricity bills are being uploaded by consumers and videos of people protesting in different cities.
Journalist Ghareeda Farooqui tweeted about the 'horrible and unbearable, unacceptable electricity bills of the people this month, if we talk about justice, people should collectively refuse to pay the electricity bill.'
