ISLAMABAD : National Electric Power Regulatory Authority (NEPRA) Member (Technical) Rafique Ahmad Shaikh has pointed out inefficiencies in the country’s transmission system due to which Rs 69 billion were paid to three coal-fired plants as capacity despite extremely low utilization.
He offered these comments in his additional note on QTA adjustment for third quarter of FY 2024-25 in which a reduction of Rs 1.55 per unit has been allowed to refund Rs 52.6 billion to the consumers of Discos and KE in bills of May, June and July 2025.
Mr. Shaikh, in his additional note stated that it is noted that the capacity claimed by Discos for the 3rd quarter of FY 2024-25 amounted to Rs. 362.395 billion, which is significantly lower than the reference figure of Rs. 459.286 billion. During the same period, electricity sales stood at 19,968 GWh compared to a reference of 21,846 GWh in the corresponding reference period.
Ordinarily, a decline in electricity sales would result in an upward adjustment in capacity charges due to the fixed-cost nature of capacity payments. However, during this quarter, the termination of certain Power Purchase Agreements (PPAs) and other adjustments related to Independent Power Producers (IPPs) operating within the system have contributed to a reduction against the projected capacity payment. Consequently, this has led to a negative adjustment in the 3rd quarter of FY 2024-25.
He further stated that although the quarterly adjustment for the 3rd quarter of FY 2024-25 has decreased significantly, enhanced governance and more efficient system operations could have further improved electricity sales, potentially leading to an even greater reduction in the adjustment amount. In this regard, the following points are outlined for consideration and focused action by the relevant stakeholders: • It has been observed that GENCO-Il (Guddu Old), GENCO-Ill (TPS Muzaffargarh), and GENCO-I (Jamshoro Power Company Limited) collectively claimed capacity payments totaling Rs. 1.237 billion during the quarter—Rs. 469 million, Rs. 350 million, and Rs. 418 million respectively—despite generating no electricity during this period. These plants are characterized by high generation costs and poor operational efficiency, with little to no likelihood of receiving despatch orders from the system operator in the future, given the availability of abundant and more cost-effective surplus capacity in the system. Continuing capacity payments to such non-operational and inefficient assets imposes an unnecessary financial burden on both the power sector and end consumers. A targeted and strategic review is therefore essential to rationalize these expenditures and improve overall sector’s efficiency.
Rafique Shaikh is of the view that in addition to other issues, transmission constraints continue to limit the utilization of several cost-effective power plants located in the southern region, notably Port Qasim, China Power, and Lucky Electric. Despite their potential to provide affordable electricity, these plants have reported extremely low utilization factors approximately 1% for Port Qasim, 10% for China Power, and 0% for Lucky Electric—during the quarter. Nevertheless, they have claimed substantial capacity payments amounting to Rs. 26.95 billion, Rs. 30.88 billion, and Rs. 11.26 billion, respectively. In total, around Rs. 69.09 billion has been claimed in capacity charges despite minimal generation. This reflects a major inefficiency in the system and underscores the urgent need to address transmission bottlenecks and improve generation dispatch practices to ensure optimal use of available low-cost generation resources.
For the third quarter of FY 2024-25, NEPRA approved a tariff reduction of Rs 1.55 per unit under the QTA mechanism for all Discos and KE. Additionally, under the FCA mechanism, a Rs 3.64 per unit reduction was approved for KE for February 2025 and a Rs 0.29 per unit decrease for Discos for March 2025.
NEPRA issued three separate notifications reflecting these determinations. KE consumers will benefit from a total relief of Rs 5.19 per unit in May 2025, combining both QTA and FCA adjustments. Further reductions for June and July will depend on future FCA data.
Discos consumers will see a combined relief of Rs 1.82 per unit in their May 2025 electricity bills. However, the joint impact of QTA and FCA in the months of June and July will be determined after the Central Power Purchasing Agency – Guarantee (CPPA-G) submits the relevant data.
According to the QTA notification, NEPRA has approved negative quarterly adjustments totaling Rs 52.603 billion for the third quarter of FY 2024-25. This adjustment will be spread over three months—May to July 2025—at a uniform rate of negative Rs 1.5538 per unit, applicable to all consumer categories except lifeline and prepaid consumers.
Regarding KE’s FCA, NEPRA has approved a provisional negative FCA of Rs 3.6396 per unit , subject to revision once the Multi-Year Tariff (MYT) for FY 2024-30 is finalized. Any differences arising from the MYT determination will be adjusted in future periods. This reduction applies to all consumer categories, except lifeline consumers, protected domestic consumers, Electric Vehicle Charging Stations (EVCS), and prepaid consumers.
This adjustment will be reflected separately on consumer bills based on units consumed during the relevant month. If any May 2025 bills were issued prior to the notification, the relief will be incorporated in subsequent billing cycles.
As for Discos, NEPRA has determined a reduction of Paisa 28.83 per unit in the tariff for March 2025 under the FCA mechanism. This reduction, applicable to all consumer categories except lifeline, protected, EVCS, and prepaid consumers, will be reflected in May 2025 bills based on March consumption. Similar to KE, any early billing will be adjusted in future months.Ends
