MYT mechanism: Nepra lowers average tariff to Rs34 for Discos
The Regulator has determined separate tariffs for the Discos based on their approved revenue requirements, which also includes Power Purchase Price (PPP). However, it is unclear if the Discos or GoP will approach the Regulator for review of determinations.
NEPRA approves K-Electric's MYT for supply segment
The determined average tariffs of different Discos are as follows: (i) Islamabad Electric Supply Company (IESCO)- average tariff Rs 29.28/kWh, revenue requirement, Rs 340.523 billion, PPP tariff, Rs 23.9851/kWh, total PPP amount Rs 300.896 billion;(ii) Gujranwala Electric Power Company (GEPCO), average tariff Rs 33.82/kWh, revenue requirement, Rs 380.412 billion, PPP tariff Rs 29.9231/kWh, total PPP amount Rs 319.942 billion;(iii) Faisalabad Electric Supply Company (FESCO), average tariff Rs 32.69/kWh, revenue requirement Rs 471. 717 billion, PPP tariff 26.0226/ kWh, total PPP amount Rs 408.406 billion; (iv) Lahore Electric Supply Company (LESCO) average tariff Rs 31.18/kWh, revenue requirement Rs 737.216 billion, PPP tariff Rs 25.1463/kWh, total PPP amount Rs 650.996 billion; (v) Multan Electric Power Company (MEPCO), average Rs 34.68/kWh, revenue requirement, Rs 595.696 billion, PPP tariff Rs 26.5094/kWh, total PPP amount Rs 513.580 billion; (vi) Peshawar Electric Supply Company (PESCO), average tariff Rs 37.20/kWh, revenue requirement, Rs 342.268 billion, PPP tariff Rs 26.1682/kWh, total PPP amount Rs 298.213 billion; (vii) Quetta Electric Supply Company (QESCO), average tariff Rs 41.54/kWh, revenue requirement, Rs 201.644 billion, PPP tariff Rs 29.8509/kWh, total PPP amount Rs 168.115 billion: (viii) Sukkur Electric Supply Company (SEPCO), average tariff Rs 35.63/kWh, total revenue requirement, Rs 120.739 billion, PPP tariff Rs 27.213/kWh, total PPP amount Rs 110.213 billion; (ix) Hyderabad Electric Supply Company (HESCO), average tariff Rs 44.36/kWh, revenue requirement, Rs 173.408 billion, PPP tariff Rs 32.6312/kWh, total PPP amount Rs 173.408 billion; (x) Tribal Areas Electric Supply Company (TESCO), average tariff, Rs 44.93/kWh, revenue requirement, Rs 61.391 billion, PPP tariff Rs 39.3703/kWh, total PPP amount Rs 59.045 billion ; and (xi) Hazara Electric Supply Company (HAZECO) average tariff, Rs 33.49/kWh, revenue requirement, Rs 74.532 billion, PPP tariff Rs 24.0776/kWh, total PPP amount Rs 63.340 billion.
NEPRA has projected a modest 2.8% growth in electricity demand for the fiscal year 2025-26, significantly lower than the 5% forecast made by the Central Power Purchasing Agency-Guaranteed (CPPA-G). This projection is based on recent trends of stagnant or declining demand, as actual generation data for the last two fiscal years showed either negative or flat growth.
In its latest determination, NEPRA approved a projected average Power Purchase Price (PPP) of Rs 25.06 per unit for FY 2025-26. This estimate is based on several macroeconomic assumptions, including an exchange rate of Rs 290/USD, low hydrology, US inflation at 2%, KIBOR at 11%, and Pakistan's inflation at 8.65%.
Nepra acknowledged that although CPPA-G initially based its forecast on an exchange rate of Rs 280/USD, the Federal Government's budgetary estimates and prevailing market conditions justify the use of Rs 290/USD. As the majority of power generation costs are dollar-indexed, exchange rate fluctuations have a direct impact on electricity prices.
The Authority, in its determination observed that during hearing various stakeholders highlighted that exchange rate of Rs.280/USB may not be realistic and may result in positive periodic adjustments as the prevailing exchange rate is already higher. It was also highlighted by one of the commentators that Federal Government in budgetary estimates has considered exchange rate of Rs.290/USD. The Authority also noted that 3 month KIBOR as of June 2025 has remained lower as compared to the projections of CPPA-G and may reduce further going forward. In view thereof, the Authority directed CPPA-G to also submit a PPP forecast scenario, by taking into account exchange rate of Rs.290/USD and KIBOR @ 11%, with following other assumptions;
CPPA-G in its Report has projected growth under two scenarios, ie, normal 2.8% and high 5%, however, actual demand during last two years either decreased or remained stagnant. For FY 2023-24, the overall generation is reduced by around 1.79% as compared to FY 2022-23 and for FY 2024-25 (May & June 2025 projected), total generation is expected to remain almost at the same level as of FY 2023-24. To analyse the projections made by CPPA-G, the actual generation data from July 2024 to April 2025 has been considered.
The actual generation from the Grid remained at 100,660 GWhs, from July 2024 to April 2025, lower by 5.40% from the reference generation assumed in PPP projections for the FY 2024-25. This reduction of 5.40%, when applied to the projected generation for May and June 2025, results in total generation of around 125,930 GWHs from the Grid.
After accounting for the increased supply to KE from national Grid in FY 2025-26, and by applying the growth rate of 2.8%, as proposed by CPPA-G in one of its growth scenarios, the projected generation works out as 132,247 GWh, which when adjusted with Transmission losses, results in demand of 128,544 GWhs at 132 KV.
CPPA-G in its Report has also projected similar demand at 132 kV, however, reliance was placed on the anticipated shift of captive consumers to National grid and improved economic situation. The improved economic situation, although may lead to additional electricity consumption, however, keeping in view increasing penetration by DGs and past trends, the Authority considered demand growth of 5%, assumed by CPPA-G as ambitious, and unlikely to happen.
Copyright Business Recorder, 2025
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