Power division, industry seek cut in fuel levy on generation

The power division and representatives of the manufacturing sector jointly demanded on Thursday that the petroleum levy on furnace oil and diesel used for power generation be removed or reduced, saying the levy adds about Rs10 per unit to electricity costs.

The demand was made at a public hearing on a request by the Central Power Purchasing Agency (CPPA) for an additional Rs2.56 per unit monthly fuel cost adjustment (FCA) to recover roughly Rs33 billion, Dawn reported. The newspaper described the position taken by the power division and the industrial representatives as unanimous.

Industrial representatives told the hearing that fuel levies were inflating the cost of generating electricity, and that the increase was being carried into the bills consumers pay. The power division backed the call for a cut, according to the report.

The FCA is a monthly adjustment through which changes in the price of fuel burned in power plants are passed on to consumers, separate from the base tariff. The CPPA files the request on behalf of power companies; the adjustment is decided after a public hearing at which consumers and industry can object.

Profit by Pakistan Today, in its own report on the same subject, said the government had collected Rs4.4 trillion in fuel levy while relief had been delayed. Its headline account did not give a period for the collection or set out how the figure was calculated.

Neither report said when a decision on the CPPA request is expected, or what the proposed Rs2.56 per unit adjustment would add to a typical household bill. Neither carried a response from the petroleum division or the finance ministry to the industry's demand for a levy cut.

The two figures aired at the hearing measure different things: the industry's Rs10 per unit estimate is its claim about the burden the levies place on generation costs, while the Rs2.56 per unit figure is the additional recovery the power companies are seeking for the month. Neither report reconciled the two.

The hearing is part of the routine monthly cycle of tariff adjustments, but the call to rewrite the taxation on generation fuel puts a longer-running dispute about who bears the cost of power in front of the regulator.