FY2025-26: CPPA-G projects Re0.30-Rs2.25 cut in power purchase price
According to CPPA-G, the report, which has been submitted to Nepra outlines seven scenarios developed through sensitivity analysis of key assumption parameters, specifically demand, hydrology, fuel prices, and exchange rates. The CPPA-G has projected PPP price at Rs 24.75 per unit in 2025-26 from current rate of Rs 27.35 per unit.
Across the analyzed scenarios, indigenous fuels constitute 55% to 58% of the overall energy mix, while clean fuels contribute between 52% and 56%. Scenario 5 — marked by a high exchange rate of Rs 300/$, low hydrology, standard fuel prices, and normal demand—yields the highest projected PPP at Rs. 26.70/kWh. In contrast, Scenario 4 which assumes normal demand and an exchange rate of Rs 280/$, results in the lowest PPP at Rs. 24.75/kWh, primarily due to reduced capacity charges. The projected PPP for each scenario in FY 2025-26.
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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.
The CPPA-G has also projected seven scenarios for reduction in PPP in FY 2025-26. In scenario 1, reduction of Rs 2.25 per unit has been sought, scenario 2, Rs 0.96 per unit, scenario 3, Rs 1.12 per unit, scenario 4, Rs 0.67 per unit, scenario 5, Rs 0.30 per unit, scenario 6, Rs 0.45 per unit and scenario 7, Rs 0.78 per unit.
The PPP forecast for FY 2026 has been submitted to the Authority for review and consideration in determining the monthly PPP reference values. The forecast was developed through comprehensive consultations in accordance with the established regulatory framework. In this regard various scenarios based on demand, fuel prices, hydrology, and economic parameters have been developed to assist the Authority in the tariff-setting process.
The results/outputs provided herein are indicative and may change due to variation of underlying assumptions including commissioning schedules, future generation fleet, fuel prices, demand forecasts, exchange rate parity, and inflation. Moreover, monthly references for power purchase price presented in the report do not account for differential adjustments that may be allowed/disallowed, as the case may be.
Accordingly, Nepra has been requested to consider the projection of Power Purchase Price references outlined in the report, along with its independent assessments, in order to arrive at the finalized PPP references for FY 2025-26.
'Any party consuming the results of this report for any purpose does so at its own risk and CPPA-G shall not be liable for the accuracy or completeness of the information contained hereunder and its suitability for any particular purpose,' said CPPA-G.
CPPA-G further stated that the forecasting process is underpinned by the IGCEP, incorporating long-term demand projections, future generation portfolios (committed plants), and key macroeconomic and technical parameters. The demand forecast is based on two scenarios, Normal and High, with projected demand growth ranging from 2.8% to 5%. aligned with expected growth for FY 2025-26. These projections form the basis for setting PPP references for FY 2025-26.
To assess the impact of hydrology on the Power Purchase Price (PPP) forecast for FY 2025- 26, two scenarios have been considered, as outlined with normal hydrology based on the 5-year average hydrological inflows and another reflecting the lower hydrological conditions observed in recent years.
Additionally, for the assessment of PPP references under high fuel price, a 5% escalation in imported fuel prices — including imported coal, RLNG. and RFO—above the baseline assumption has been incorporated into the analysis. However, low fuel prices account for a 5% reduction in the fuel price of imported fuels during the horizon.
Projections for key economic parameters — include LIBOR, KIBOR, U.S. inflation, and Pakistan inflation. The inflation data for the United States and Pakistan has been sourced from the IMF's World Economic Outlook report. To estimate KIBOR and SOFR, appropriate spreads have been applied in line with historical trends and prevailing market dynamics.
Two power plants — Jamshoro Coal Power Plant and Shahtaj — have been considered for commissioning prior to the start of FY 2025-26. However, due to ongoing technical issues at the Neelum-Jhelum Hydropower Plant, it has not been included within the forecast horizon.
The following additional assumptions have been applied in the preparation of PPP references for FY 2025-26: (i) HVDC+AC Corridor Transfer Capability: -Transfer limits are set at 4,500 MW for summer 2025. 3,600 MW for Winter and 5,000 MW for Summer 2026 (following the commissioning of Lahore North), as per the Normal Opera/ion arrangement of the SCS Strategy Table provided by M/s NARI; (ii) The mandatory 50% offtake under contractual obligations for imported coal has not been assumed in this dispatch plan; and (iii) these are based on assumed demand scenarios.
However, actual fuel demand may vary depending on real-time system conditions and will be managed in accordance with prevailing contractual agreements.
Copyright Business Recorder, 2025
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