ISLAMABAD: The National Electric Power Regulatory Authority (NEPRA) has directed the Power Division to address the concerns of the industrial sector regarding inconsistent power supply. Industries are reportedly considering a return to Captive Power Plants (CPPs) despite their higher operational costs due to frequent grid supply disruptions.
These directions were issued during a public hearing on a petition filed by the Central Power Purchasing Agency-Guarantee (CPPA-G) concerning assumptions used to project the Power Purchase Price (PPP) for the financial year 2025–26.
The hearing was chaired by NEPRA Chairman Waseem Mukhtar and attended by Member (Technical) Sindh Rafique Ahmad Shaikh, Member (Technical) KPK Maqsood Anwar Khan, and Member (Law) Amina Ahmed.
CPPA-G presented seven scenarios for the proposed PPP. In scenario one, CPPA-G has projected PPP at Rs 24.75 per unit, scenario 2- Rs 26.04 per unit, scenario 3- Rs 25.88 per unit, scenario 4- Rs 26.33 per unit, scenario 5- Rs 26.70 per unit, scenario 7- Rs 26.55 per unit and scenario 7, Rs 26.22 per unit.
Reply to question, the representative of CPPA-G, Naveed Qaiser said that scenario 4 and 5 are likely to be implemented next year.
However, these projections were challenged by several interveners who argued that the estimates do not adequately reflect the expected decline in hydropower generation. They also criticized the assumed exchange rate of Rs 290/USD, which is likely to influence future electricity pricing.
In response to a query, CPPA-G representative Naveed Qaiser stated that scenarios 4 and 5 are the most likely to be implemented in the next fiscal year.
Arif Bilwani highlighted flawed assumptions around hydrology, noting current drought-like conditions. He urged NEPRA to make CPPA’s hydrology report publicly available.
He also disputed the assumed GDP growth rate, which stands at 2.8% in CPPA projections, despite the World Bank recently revising it down to 2.7%.
“Demand growth doesn’t reflect industrial realities, especially with persistent contraction in large-scale manufacturing,” he said.
Bilwani further noted that the benefits of renegotiations with IPPs and GENCOS are not visible in capacity payment projections. The COD of Jamshoro coal power plant alone will add Rs 60 billion in capacity charges. “There’s also no indication of renegotiation progress with Chinese IPPs or remaining local IPPs,” he added.
He criticized inflation and KIBOR assumptions, which are pegged at 8.65% and 11.9%, respectively, suggesting both figures are inflated compared to current trends and should be revised.
The impact of solar generation, whether net-metered or behind-the-meter, has also been inadequately factored into the model, Bilwani argued.
According to Qaiser, projections for GDP growth, inflation, and interest rates are based on input from IFIs, Finance Division and other relevant entities.
Amir Sheikh from Lahore emphasized that the industry expects electricity tariffs to fall—not rise—from July 2025, compared to Q4 FY 2024-25.
“Power quality from the grid is already poor, causing up to 10% production losses compared to captive generation. The industry is seriously considering a return to CPPs. If tariffs also increase, it could significantly reduce electricity consumption,” he warned.
He also questioned the lack of visible benefits from recent renegotiations with Independent Power Producers (IPPs), noting that proposed tariffs remain close to last year’s rates.
“Various tariff deductions announced by NEPRA were time-bound till June. If the base tariff isn’t reduced by July 1, the end of QTA and FCA benefits could push rates up by Rs 5–6 per unit,” he added.
A representative from the Punjab Power Board questioned whether the renegotiated IPP capacity payments had been factored into the assumptions, since capacity payment projections remained unchanged.
Qaiser responded that the government initially projected a Rs 4 trillion reduction in capacity payments. However, this has now been revised down to Rs 2–2.4 trillion due to additional liabilities from Jamshoro and Shahtaj Sugar Mills.
In response to Member KPK’s inquiry, CPPA-G stated that industrial tariffs could decline by 1% to 8%, depending on the scenario.
In scenario one, CPPA-G has projected PPP at Rs 24.75 per unit, scenario 2- Rs 26.04 per unit, scenario 3- Rs 25.88 per unit, scenario 4- Rs 26.33 per unit, scenario 5- Rs 26.70 per unit, scenario 7- Rs 26.55 per unit and scenario 7, Rs 26.22 per unit.
Reply to question, the representative of CPPA-G said that scenario 4 and 5 are likely to be implemented next year.
Tanveer Barry, representative from KCCI Karachi said that the projected power purchases ranges between Rs 24.75/kwh and Rs 26.22/ kwh is still very high. This level of tariff undermines industrial competitiveness, increase the cost of doing business, and may deter export growth.
He was of the view that the government claimed that it has saved trillions of rupees through negotiated agreement but capacity charges are still very high. In Pakistan industrial sector is paying almost double the electricity prices as compared to other regional countries. Time of Use power tariff structure for industrial consumers should be abolished. Industrial consumption is declining because of expensive electricity. Expensive power plants should be shut down and replaced with efficient power plants and renewable energy.
Rehan Jawed stated that the government should take a decision on net metering otherwise, it will be become a big issue for the power sector like IPPs issue.
The representative of APTMA, Amir Riaz criticised the planners for making irrelevant decisions. He proposed integrated approach to reduce electricity rates for the industry.
During the hearing, it was revealed that the PPP could drop by 78 paisas to Rs 2.25 per unit, potentially saving consumers Rs 140 billion to Rs 400 billion in the next fiscal year. The average power purchase price is expected to range between Rs 24.75 and Rs 26.22 per unit, compared to the current average of Rs 27 per unit.
Authorities projected a possible Rs 2 per unit reduction in tariffs alongside a 2.8% to 5% increase in demand, assuming an exchange rate of Rs 300/USD in FY 2025–26.
The case officer explained that due to varying demand and fuel price assumptions, average per-unit prices in different scenarios could range between Rs 6.8 and Rs 8.1. Total fuel costs might reach Rs 1.28 trillion, influenced by exchange rate fluctuations, inflation, and interest rates.
Some scenarios also predict a 24% reduction in electricity prices compared to the current year. Transmission losses for NTDC are expected to remain stable at 2.80%.
NEPRA questioned the Ministry of Energy’s optimistic demand projections, especially given recent downward trends. In response, ministry officials argued that demand is expected to rebound in line with projected GDP growth. They noted that electricity demand rose 28% in April, attributing the uptick to recent tariff reductions that encouraged industries to reconnect to the grid.
The projections/ assumptions of CPPAA-G were challenged by the interveners who stated that projections for the PPP for FY 2025-26 are not correct as reduction in hydel generation was imminent. The budget for FY 2025–26 is projected to be prepared at an exchange rate of Rs. 290 per dollar.
During the hearing it was revealed that the power purchase price is estimated to decrease by Paisa 78 to Rs. 2.25 per unit, which could provide relief worth Rs. 140 billion to Rs. 400 billion to electricity consumers in the next fiscal year.
According to officials, the estimated power purchase price for the upcoming fiscal year is expected to range between Rs. 24.75 and Rs. 26.22 per unit, compared to Rs. 27 per unit for the current fiscal year. Authorities also estimated a Rs. 2 per unit reduction in electricity prices and a 2.8% to 5% increase in demand. The US dollar is projected to be valued at Rs. 300 in the next fiscal year.
During the briefing, the case officer informed NEPRA that the request pertains to the projections for power purchase price in the coming fiscal year. Different scenarios suggest a significant variation in electricity prices, with the average per-unit price likely to remain between Rs. 6.8 and Rs. 8.1. Due to potential increases in fuel costs, the total fuel cost could rise to as much as Rs. 1,284.11 billion. Factors such as the dollar rate, inflation, and interest rates impact electricity prices, which is why prices are expected to be higher in scenarios with low demand and high fuel costs.
The briefing further revealed that compared to the current fiscal year, some scenarios could result in a 24% decrease in electricity prices, while transmission losses for NTDC are expected to remain at 2.80%.
During the hearing, NEPRA questioned the Ministry of Energy’s claims regarding increased electricity demand. The NEPRA chairman asked how an increase is expected when demand has been declining in recent years. The Ministry of Energy responded that demand is expected to rise based on GDP growth, and recent reductions in electricity prices have already led to an increase in demand. In April, electricity demand increased by 28%, and industries have started returning to the grid. If tariffs remain low, electricity demand will increase.
The Ministry of Energy also briefed NEPRA on fuel price projections for the next fiscal year. Officials stated that the cost of gas for electricity generation is estimated to remain at Rs. 1,050 per MMBTU. Thar coal is projected to cost $20 per ton from July to September, and $18 to $19 per ton from October to June. Imported coal (API 4) is estimated to remain at $100 per ton throughout the year, imported coal (ICI 3) at $74 per ton, and imported coal (ICI 5) at $35 per ton. Brent crude oil is expected to be priced at $74 per barrel until January 2026, and $72 per barrel from March to June 2026.
According to the NEPRA briefing, furnace oil is estimated to cost $522 per ton from July to December and $508 per ton from January to June. The price of high-speed diesel is expected to remain at Rs. 264 per liter throughout the year.
While briefing NEPRA on electricity demand for the next fiscal year, the Ministry of Energy added that according to the IMF, GDP is expected to grow by 3.6% in 2026, and electricity demand is projected to increase by 2.8% to 5% in 2025–26. Demand on the 132kV grid may reach between 128,000 million and 131,000 million units.
Officials stated that electricity demand dropped significantly in 2023, improved somewhat in 2024, and is expected to grow steadily in the coming years.
Chairman NEPRA Waseem Mukhtar instructed the Power Division to take industrial concerns seriously, particularly regarding poor service quality from Discos and future power pricing so industries can plan accordingly.
Bhatti acknowledged that sudden power interruptions are a major issue and committed to addressing them through the PPMC.
Ends
