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Business Recorder
02-07-2025
- Business
- Business Recorder
Nepra rejects govt plea to apply revised SoT to KE
ISLAMABAD: National Electric Power Regulatory Authority (Nepra) has turned down the federal government's plea to apply a revised uniform Schedule of Tariff (SoT) to K-Electric (KE), based on the previously determined tariff for the January–March 2023 quarter— a move likely to frustrate the Power Division. Nepra's decision was revealed in a determination issued on Tuesday, which outlines a revised average uniform SoT of Rs 31.59/kWh for both power Distribution Companies (Discos) and K-Electric for the fiscal year 2025–26. This rate marks a reduction from the earlier Rs 32.73/kWh (excluding duties and taxes), reflecting an average decrease of Rs 1.14/kWh after factoring in a budgeted Tariff Differential Subsidy (TDS) of Rs 250 billion for FY 2025–26. In its formal request (Motion for Leave), the Power Division argued that under government policy, a uniform consumer-end tariff should be maintained across K-Electric and state-owned Discos— even post-privatisation— through a mix of direct and indirect subsidies. To achieve this, the KE tariff should be modified to align with Nepra's approved national uniform tariff structure, incorporating the proposed targeted and cross subsidies. DISCOs and KE: Nepra approves revised average uniform SoT The Power Division also referenced legal provisions— Section 7, 31(4), and 31(7) of the NEPRA Act and Rule 17 of the relevant rules— supporting its appeal for revised consumer-end tariff recommendations for K-Electric, to be effective from July 1, 2025. The motion included a request to update the SoT via an amendment to SRO No. 575(1)/ 2019. During the hearing, K-Electric's Director of Finance Ayaz Jaffer urged Nepra to use KE's most recent tariff (determined on May 27, 2025) instead of the older Jan–Mar 2023 rates to establish the uniform tariff. However, Naveed Qaiser of the Power Planning and Monitoring Company (PPMC) opposed the suggestion, pointing out that the federal government has already filed a review petition against the newer KE tariff determination. Therefore, he argued, the Jan–Mar 2023 tariff should be treated as the valid benchmark. The Authority said it understands that it determines revenue requirement/ tariff for Discos for each year. Ultimately, Nepra decided not to accommodate the Power Division's request. In its official determination, the regulator stated that despite the federal government's plea to use the Jan–Mar 2023 KE tariff as the basis for a uniform SoT, it opted to apply the rates from KE's latest approved tariff for FY 2023–24, as issued on May 27, 2025. Nepra announced a reduction in the uniform average tariff from Rs 35.50/kWh to Rs 34/kWh, indicating an overall decrease of Rs 1.50 per unit. The revised SoT for consumers will be as follows: (i) up to 50 units– lifeline (Rs 3.95/kWh;(ii) 51-100 units- lifeline Rs 7.74/kWh;(iii) 0-100 (protected) Rs 10.51/kWh;(iv) 101-200 (protected)Rs 13.01 /kWh; (v) 01-100(non-protected) Rs 22.44/kWh; (vi) 101-200(non-protected) Rs 28.91/kWh;(vii) 201-300(non-protected Rs 33.10/ kWh; and (viii) 300 & ToU (non-protected) Rs 41.78/kWh. Average uniform domestic tariff will be Rs 27.20/kWh with reduction of Rs 1.13/Kwh from 28.33/kWh. New commercial tariff has been fixed at Rs 45.43 per unit with a reduction of Rs 1.15/Kwh, general services, Rs 43.17/kWh, industrial Rs 33.48/kWh, Bulk Rs 41.76/kWh, agricultural Rs 30.75/kWh, others Rs 32.68/kWh. According to Nepra, total number of electricity consumers is 37,994,210 who are projected to consume 103,558/MkWh. The average tariff has been reduced to Rs 31.59/kWh for FY 2025-26 from Rs 32.73/kWh through re-basing. Power Division explained that capacity charges have been reduced by Rs.186 billion, despite additional impact of Rs.50 billion capacity charges of Jamshoro Coal Plant, as compared to the reference capacity charges for the FY 2024-25. This reduction is mainly on account of termination/ re-negotiations of IPP contracts and change in exchange rate assumption. The Authority also observed that the petitioner in its Motion and also during the hearing submitted that inter-disco tariff rationalisation is not aimed at raising any revenues for the federal government as it is within the determined consolidated revenue requirement of all the Discos for the FY 2025-26; rather the federal government would be providing a subsidy of Rs.249 billion to different consumer categories during the period. The Uniform Tariff so determined by the Authority includes impact of PYA of Rs.58.68 billion, to be passed on in a period of twelve months from the date of notification of the decision. It was further stated that there is no anomaly in the current industrial tariff structure as the total cost of B4— inclusive of both fixed and variable charges—is actually lower than B3, which is again lower than B2. This reflects the benefit of losses for consumers connected at high tension (HT) lines, as opposed to industrial consumers on low tension (LT) lines. It was explained that ToU (Time-of-Use) pricing plays a critical role in maintaining power system stability and economic efficiency. Peak hours are strategically designated to curb demand during periods of high system stress when marginal generation costs are at their highest. However, lowering the peak rate would necessitate an upward adjustment of the off-peak rate to meet the system's annual revenue requirement. This could disproportionately burden smaller industrial consumers and potentially reduce overall electricity sales, thereby exacerbating the revenue shortfall and contributing to further upward pressure on tariffs. Copyright Business Recorder, 2025
Business Recorder
15-05-2025
- Business
- Business Recorder
Textile sector may return to costlier CPPs: PD's PPP projections to Nepra draw sharp criticism
ISLAMABAD: The Power Division came under heavy criticism on Thursday for submitting what were termed unsubstantiated Power Purchase Price (PPP) projections for FY 2025-26 to Nepra and for the continuing unreliable power supply by distribution companies (Discos). Concerns were raised that these issues could drive the textile sector back to costlier Captive Power Plants (CPPs), despite grid electricity being comparatively cheaper. The National Electric Power Regulatory Authority (NEPRA) held a public hearing chaired by Waseem Mukhtar, with participation from Member (Technical) Sindh Rafique Ahmad Shaikh, Member (Technical) KPK Maqsood Anwar Khan, and Member (Law) Amina Ahmed. Discussions revolved low hydrology levels, inflation, interest rate forecasts, GDP growth, solar tariffs, and fuel price assumptions. The Power Division team, led by Additional Secretary Mehfooz Bhatti and CPPA-G's Naveed Qaiser, presented seven scenarios using sensitivity analysis based on demand, hydrology, fuel prices, and exchange rates. 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. In response to a question, the representative of CPPA-G said that scenario 4 and 5 are likely to be implemented next year. 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. Policy overhaul needed for textile sector CPPA-G representative Naveed Qaiser noted that the GDP growth, inflation and interest rates were projected on the information from IFIs, Finance Ministry and domestic financial experts. Amir Sheikh from Lahore stated that industry demands that electricity tariff decreases and in no way increases from July onwards as compared to the April/May/June quarter. 'Already the quality of power from grid is very poor resulting in up to 10% production loss as compared to captive generation and industry is considering switching back to captive. If tariff also increases, then it would lead to big fall in consumption,' he said adding that despite major renegotiations with IPPs, industry is amazed that the proposed tariff for next year is almost the same as last year and the benefit from renegotiations is nowhere to be seen. 'The various price deductions that were announced by Nepra were all time-bound till June. Therefore, if base tariff is not decreased from July 1, 2025 the tariff may increase by Rs 5-6 after the benefit of negative QTA and FCA will be over,' Amir Sheikh said. Chairman Nepra Waseem Mukhar directed Power Division to look into the viewpoint of industry, especially with recent poor quality of power supply from Discos, which is an irritant for industry and to provide future projections of power rates so that industry can make its plans accordingly. Mehfooz Bhatti, Additional Secretary Power said that abrupt suspension of supply is a serious issue and he would look into it through Power Planning and Monetary Company (PPMC). Arif Bilwani said that hydrology assumptions are very critical as we are facing substantially reduced water flows because of draught like conditions. Nepra has already directed the CPPA to prepare report and share and requested that the report be displayed on Nepra website. 'GDP growth figure is also on higher side as the World Bank has revised its projections downward from 2.8% to 2.7%. Demand growth is also not reflecting ground realities. Consistent decline in industrial demand particularly from LSM is being reported for the last 1 1/2 years, he added. 'Benefits of renegotiation with IPPs and GENCOS is not being reflected in Capacity Payments. Further increase in CPP (Rs. 60 billion) will accrue due to Jamshoro imported coal power plant. There is no mention/impact of renegotiation with the left out IPPs, GENCOs & Chinese power plants,' Bilwani argued. Kibor has been assumed at 11.9% although it is expected to be further reduced during the year reaching single digit. Inflation has been assumed at 8.65% which is extremely high, although the country is already witnessing, as per GOP, the lowest inflation in decades. There is a need to readjust the two figures. Bilwani further stated that the impact of solar Net Metering has not been properly accounted for in the assumption and requires to be looked at. The representative of Punjab Power Board enquired as to what was the financial impact of renegotiated IPPs and have the PPAs been made part of the assumption as projections of capacity payments are the same as last year. Naveed Qaiser responded that government had projected Rs 4 trillion reduction in capacity but reduced it to Rs 2 trillion to 2.4 trillion due to COD of Jamshoro Power Plant which will cost Rs 60 billion and Shahtaj Sugar Mills. Member KPK, enquired as to how much will the industrial tariff be reduced? The representative of CPPA-G stated that electricity rates can be reduced from 1 per cent to 8 per cent. According to Qaiser, projections for GDP growth, inflation, and interest rates are based on input from IFIs, Finance Division and other relevant entities. Nepra Chairman Waseem Mukhtar instructed the Power Division to take the concerns of industry 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 added that there is a commitment to addressing them through the PPMC. 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 and increases the cost of doing business and may deter export growth. He further argued 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 price 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. Copyright Business Recorder, 2025
