The Gujarat government has increased the fuel surcharge for almost all consumers for the third time in 2022, in order to cover the cost of purchasing expensive power from energy exchanges to cover the deficit.
On April 29, Gujarat Urja Vikas Nigam Ltd (GUVNL) issued a directive to all four electricity distribution companies, instructing them to charge Rs 2.30 per unit as FPPPA (fuel and power purchase price adjustment charges or fuel surcharge), an increase of 10 paise.
GUVNL also informed the discoms that it has applied to the Gujarat Electricity Regulatory Authority (GERC) for permission to recover an additional 32 paise per unit as FPPPA from all consumers, with the exception of agricultural consumers whose electricity consumption is subsidised by the state government.
These charges vary every quarter of the financial year on account of variations in actual cost of power purchase and the volume of the purchase. The FPPPA is charged on every unit of consumption in a monthly or bi-monthly electricity bill of the consumers.
While increasing the FPPPA, the Gujarat government owned GUVNL has admitted that during 2021-’22, the increase in purchase cost of electricity, high prices of imported coal and gas, and exorbitant price in power exchanges and increased demand were reasons pushing the FPPPA northwards.
“Internationally, the prices of coal increased five times and we purchase 40 per cent of our electricity from projects using imported coal that include the Tatas, Adani and Essar. Secondly, there are more purchasers in the open market than sellers and so the average per unit price jumped to Rs 20. The CERC later reduced it to Rs 12 per unit. Thirdly, industries that had captive power plants have switched to the grid, causing a spike in power demand. Because of these reasons, the power purchase cost has gone up significantly,” said a senior official of GUVNL.
The government has not been able to operate gas-fired plants after prices of natural gas went through the roof.
When asked if there is still a deficit between the demand and supply in Gujarat, the GUVNL official said, “Everyday we are supplying almost 21,000 MW, which is about 455 million units in districts, including Ahmedabad and Surat. We are buying 1-2 million units power from the energy exchanges during early morning or late evening when the demand peaks. We cannot go for load-shedding and so we are purchasing expensive power.”
Gujarat’s electricity demand has soared to over 20,000 megawatts this summer, forcing the government to purchase power from energy exchanges.
Gujarat, which is suffering from a coal shortage, purchased power from exchanges in October 2021 for between Rs 15 and Rs 17 per unit. Despite having close to 37,000 MW of power generation capacity, including more than 15,000 MW of renewable energy, the government continues to buy from the exchanges.
GUVNL bought 2,893 million units of power from Indian Energy Exchange in the fourth quarter of 2021-’22 at a rate of Rs 5.14 per unit, according to Bajaj. Gujarat purchased 2,075 and 1,803 million units from Tata Power and Adani Power, respectively, at Rs 7.43 and Rs 7.7 per unit, during the same period.