4th hike in 5 months: Gujarat government increases fuel surcharge to Rs 2.50 per unit

The Gujarat government has increased fuel surcharges from 20 paise to Rs 2.50, applicable on each unit of electricity consumed, for the fourth time in the last five months. This increase will impact the electricity bills of all categories of consumers with the exception of agricultural consumers.

According to the state-owned Gujarat Urja Vikas Nigam Limited (GUVNL), the increase in Fuel and Electricity Purchase Price Adjustment (FPPPA) Charge or Fuel Surcharge will be effective from 1 May 2022 and will be recovered from electricity from May-June 2022. consumer bills.
The FPPPA was lifted after the Gujarat Electricity Regulatory Commission (GERC) headed by former Chief Secretary Anil Mukim gave its approval.

A week ago, The Indian Express reported that GUVNL had requested a 32 paise increase in the FPPPA from the GERC.

“In this regard, it is worth stating that GUVNL receives the approval of the Honorable GERC allowing the recovery of an additional FPPPA of Rs 0.2 per unit, on the unrecovered FPPPA of the financial year 2021-22, at effective May 1, 2022,” said an official statement to the four
state discos on Wednesday.

“In view of the above, it is requested to recover the FPPPA at Rs 2.5 per unit from all categories of consumers except agricultural consumers, as the government subsidizes the FPPPA charges applicable to agricultural consumers” , the statement added.

With the latest fuel surcharge hike, a residential consumer in Gujarat who paid Rs 1.8 per unit as an FPPPA charge on his electricity bill for May-June 2021, will now pay Rs 2.5 per unit i.e. an increase of 70 paise per unit in the electricity bill.

“Over the past two months, the FPPPA has increased by 30 paise per unit. This will impose a burden of Rs 270 crore per month and Rs 3,240 crore per year on electricity consumers in Gujarat,” says KK Bajaj, an electricity regulatory expert who attends hearings on tariff applications at the GERC.

The FPPPA increase order placed by GUVNL is applicable throughout Gujarat except for some parts of cities like Ahmedabad, Gandhinagar, Surat and Dholera SIR where Torrent Power is supplying power.

The government of Gujarat has been forced to increase fuel surcharges as the increase in electricity tariffs could become politically sensitive, especially in a year when Gujarat parliamentary elections are scheduled.

“The government says it has not increased electricity tariffs in Gujarat for the past six years. But they increased indirectly by increasing the FPPPA charges,” Bajaj added. At the start of 2016, the FPPPA stood at 1.35 rupees per unit, as fuel surcharges that add to consumers’ electricity bills have risen by 85% over the past six years.

The FPPPA increase order passed by GUVNL is applicable throughout Gujarat except for some parts of cities like Ahmedabad, Gandhinagar, Surat and Dholera SIR where Torrent Power provides power. As of April 2022, Torrent charges Rs 2.31 per unit for customers in Ahmedabad and Gandhinagar and Rs 2.27 per unit for Surat. Last year, the FPPPA fee for Torrent Power customers was Rs 2.11 per unit for Ahmedabad and Gandhinagar and Rs 2.07 per unit for Surat.

Despite power generation capacity close to 37,000 megawatts (MW), Gujarat, which faced peak demand of 20,000 MW this summer, was forced to buy expensive power from exchanges electricity and private electricity producers.

GUVNL officials told The Indian Express that the government did not want to impose blackouts and hence ended up buying expensive electricity from power exchanges which cost up to Rs 20 per unit in 2021-22 . The power shortage in Gujarat has been caused largely by non-functional power generation units or those with very low plant load factor (PLF).

Expensive coal and high natural gas prices also contributed to the crisis.

GUVNL officials also said they could not count on the 16,000 MW of renewable capacity, due to huge fluctuations in supply.

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