Latest news with #PPIB
Business Recorder
08-07-2025
- Business
- Business Recorder
Recovering PPIB's annual fee: Nepra approves 1.1 paisa per kWh tariff hike
ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) has approved a power tariff increase of 1.1 paisa per kilowatt-hour (kWh) by allowing the recovery of the Private Power and Infrastructure Board (PPIB)'s annual fee of $250 per megawatt (MW) from electricity consumers. This adjustment permits the annual PPIB fee to be treated as a pass-through cost, similar to other recoverable charges by the Central Power Purchasing Agency-Guarantee (CPPA-G) and the Nepra itself. The Nepra held a suo motu public hearing on February 13, 2025, to seek input from PPIB and stakeholders. As per Nepra's rules, any fee levied on power generation or capacity is typically passed on to consumers. Power tariff hike: govt reaches 'understanding' with IMF In its determination issued Monday, Nepra acknowledged that PPIB has significant budgetary needs, including plans to develop infrastructure such as a dedicated office building. While these may be valid from an operational perspective, Nepra emphasised that any cost passed on to end-consumers must be carefully justified and balanced against electricity affordability. 'The Authority recognises PPIB's institutional requirements but also must ensure that costs allowed as pass-through items do not place an unjustified burden on consumers,' the determination stated. 'Only demonstrably necessary, efficient and proportionate expenses should be permitted under the Nepra Act.' Nepra noted that while it scrutinises and approves the budgets of other licensees such as the Market and System Operators, it does not currently have the authority to vet PPIB's budgetary requirements. This lack of oversight, the Authority observed, reinforces the need for the PPIB fee to be rationalised and denominated in rupee terms to minimise exchange rate risks and unnecessary financial pressure on consumers. From PPIB's perspective, the annual fee is necessary to ensure institutional financial sustainability and falls within its legal mandate. However, Nepra acknowledged that many Independent Power Producers (IPPs) view this fee as an added financial burden not originally factored into their tariff structures or Power Purchase Agreements (PPAs), especially since the PPIB Fee Rules were introduced in 2018. Nepra noted that the CPPA-G has treated the fee as a pass-through in most cases. However, for projects under the 2015 Power Policy, this treatment depends on the 'change in law' provisions within their contractual frameworks, requiring both Nepra's determination and a government notification. 'In view of the legal framework, historical practice, and the need to maintain regulatory consistency, the Authority has allowed the PPIB annual fee as a pass-through, subject to compliance with the relevant provisions of PPAs/ EPAs and Nepra's tariff regime,' the decision stated. PPIB earlier informed Nepra that while some IPPs have paid the annual fee without objection, others have raised concerns before forums including the Minister for Energy and the secretary Power Division. These IPPs argued that the original $300/MW fee was excessive and requested a downward revision. In response, the PPIB Board reduced the annual fee to $250/MW through the 'PPIB Board (Fees and Charges) (Amendment) Rules 2021,' which were officially notified on June 15, 2022, following Board approval in August 2021. Commenting on the decision of Nepra, Barrister Asghar Khan, a power sector legal expert, stated that the PPIB fee allowed by the Nepra as a pass-through is not permissible under the Nepra Act, Rules and Regulations. 'When PPIB fee is not part of the capital expenditure (CAPEX), operational expenditure (OPEX), Quarterly Tariff Adjustments (QTAs) or Fuel Price Adjustment (FCA), of the IPPs, then how in a slipshod manner, it to be treated as part of the tariff by the Nepra Authority,' he added. According to him, the Nepra Authority does not have the competence and jurisdiction to admit and allow such charges, fees and taxes as part of the tariff when (i) PPIB is not a licensee of the Nepra and (ii) such fees, charges and fees are not levied as part of the generation, transmission and distribution business of the power entities. Needless to mention that such fees and taxes have been allowed in exercise of suo motu powers exercised by the Nepra Authority which powers are not vested in the courts of law let alone the Nepra Authority. He stated that the Nepra Authority does not have the power and competence to convert fees and charges into tariff or terms and conditions of the tariff. The PPIB Fee levied under Section 5 (2) (i) of the PPIB Act 2012 prescribes that it shall receive fees and charges for processing applications and deposit and disburse or utilise the same, if required. Such fees and charges are never meant to be part of the tariff to be charged to the consumers of the electricity. Further, such fees and charges constitute part of the PPIB Fund under Section 14 of the PPIB Act 2012 and are not to be treated as a pass-through in the tariff. He said furthermore, the PPIB fee is not part of the security package agreements or any power policy then how Nepra Authority has allowed such PPIB fee as part of the tariff and an additional burden on the consumers of electricity. The PPIB is a public entity as such entity is defined under the Public Finance Management Act, 2019, and without any views of the Finance Division on the policy, guidelines, rules or regulations framed for the PPIB Fund constituted under the PPIB Act, 2012, Nepra has allowed these charges and fee as part of the tariff which in essence means that monies from the Public Accounts are withdrawn to be collected and disbursed to the PPIB fund which is violation of the constitutional provisions, Nepra Act, 1997, PPIB Act, 2012, and PFMA 2019, he said. He was of the view that the Nepra Authority without any financial analysis has allowed the entire fees levied by the PPIB in a blanket manner. The scope of such fee is unlimited spanning from 1994 Power Policy, 2002 Power Policy, 2015 Power Policy, RE Policy 2006, ARE Policy 2019 and others. 'The Nepra Authority's Order is bad in law as it does not define the scope, quantum, causation; etc., of such fee in relation to the electric power services and is a taxation without the approval of Parliament under Article 77 of the Constitution of Pakistan which clearly directs and mandates that 'No tax shall be levied for the purposes of the Federation except by or by or under the authority of Act of [Majlis-e-Shoora (Parliament)],' he concluded. Copyright Business Recorder, 2025
Business Recorder
19-06-2025
- Business
- Business Recorder
Net-metering adds 2,813MW to power generation capacity
LAHORE: An installed capacity of 2,813MW from net-metering has resulted into an increase in Pakistan's total installed electricity generation capacity. As of July-March FY 2025, Pakistan's total installed electricity generation capacity stood at 46,605MW, reflecting a 1.6 percent increase compared to 45,888 MW recorded in the corresponding period of FY 2024. According to Economic Survey of Pakistan, the percentage shares of hydel, nuclear, renewable, and thermal are 24.4 percent, 7.8 percent, 12.2 percent, and 55.7 percent, respectively. The share of thermal power as a dominant source of electricity supply has declined over the past few years, showing an increased reliance on indigenous sources. Out of the total electricity generation of 90,145 GWh, the share of hydel, nuclear, and renewable stands at 53.7 percent. This shift marks a positive development of the economy, as the energy mix transitions away from thermal generation towards more sustainable and environmentally friendly alternatives. A number of fast track solar initiatives have been taken to reduce the impact of high prices of oil and LNG in the international markets resulting in high electricity tariffs and drain foreign exchange reserves, the government has approved the Framework Guidelines for Fast-Track solar PV Initiatives 2022 for fast-track deployment of solar PV. The framework is based on three key pillars, including substitution of expensive imported fossil fuels with Solar PV Energy, Solar PV Generation on 11kV Feeders and solarization of public buildings. For solarization of 11kV feeders, solar PV-based power generation capacity shall be procured for the substitution of expensive imported fossil fuels used for power generation. Exact quantum will be determined on approval of the IGCEP by NEPRA. For solarization of 11kV Feeders, PPIB has prepared and shared the standard RFP and Energy Purchase Agreement with all DISCOs for approval from their respective Boards. Under Public Building Solarization, PPIB has prepared model RFP documents and contract agreements to facilitate Public Sector Entities (PSEs) in the solarization of their buildings. PPIB conducted competitive bidding for 330 buildings on the Lease Purchase Model and 85 buildings on the own-cost model. PPIB is also actively engaged with several PSEs to provide technical support in the solarization of their buildings. Copyright Business Recorder, 2025
Business Recorder
10-06-2025
- Business
- Business Recorder
Jul–Mar power usage down 3.6pc
ISLAMABAD: Pakistan's electricity consumption has declined by 3.6 per during the first three quarters (July–March) of FY 2024-25 due to variety of reasons, including subdued industrial activity and consumers financial position. According to the Economic Survey 2024-25, during July-March FY 2025, total electricity consumption in Pakistan stood at 80,111 GWh, compared to 83,109 GWh in the corresponding period of FY 2024, reflecting a 3.6 percent decline in electricity usage. This contraction may be attributed to ongoing energy conservation measures, elevated power tariffs, off-grid solar solutions, and subdued industrial activity. The survey says that the household sector continued to dominate electricity consumption, with its share rising to 49.6 percent (39,728 GWh) during July-March FY 2025, up from 47.3 percent (39,286 GWh) in the same period of FY 2024. This increase indicates a relative expansion in residential demand, possibly driven by population growth, an increased use of home appliances, and stable weather-related consumption patterns. In contrast, industrial consumption slightly declined both in absolute terms and share. The sector consumed 21,082 GWh, down from 22,031 GWh, reducing its share from 26.5 percent to 26.3 percent. Electricity usage in the agriculture sector dropped significantly by 34.3 percent, falling from 6,951 GWh to 4,566 GWh, which reduced its share from 8.4 percent to 5.7 percent. This sharp decline is likely due to changes in irrigation practices, rainfall patterns, and possibly a switch to diesel-powered or solar alternatives in response to rising electricity costs. The commercial sector recorded a modest increase in consumption, from 6,776 GWh to 6,898 GWh, slightly raising its share to 8.6 percent. This rise indicates a marginal pickup in business and retail activity, particularly in urban centers. The 'others' category, comprising public lighting, bulk supply, and government buildings, consumed 7,037 GWh, maintaining a stable share at 9.8 percent, broadly consistent with the previous year. The PPIB is working on multiple fronts, such as diversifying the energy mix, prioritizing indigenous and renewable resources by replacing the imported fuel-based IPPs with indigenous and renewable. Alongside, PPIB is steadily progressing towards a successful energy transition and promotion of indigenization. This is very much evident from PPIB's current portfolio, which consists of 19 new multiple fuels/technologies (solar, wind, coal, hydro, RLNG/Gas, baggasse) based IPPs of 6,536 MW combined capacity. Among these, 16 are renewable energy projects (including hydropower), indicating that 84 percent of the portfolio will be sourced from clean and green energy. This scenario testifies to the GoP steadfast approach for promotion of indigenization and implementation of RE-based power projects in the country. Further, the GoP has also decided to process future projects based on demand-supply projections as per the Lahore transmission line project has been completed with private sector investment through PPIB. Currently, PPIB is overseeing a fleet of 88 operational IPPs with a cumulative capacity of 20,726 MW totaling $ 28.6 billion combined investment. This capacity, along with KE's represents 59 percent of national grid's capacity. Under this initiative, solar PV-based power generation capacity shall be procured for the substitution of expensive imported fossil fuels used for power generation. Exact quantum will be determined on approval of the IGCEP by Nepra. In this regard, as a first step, a 600 MW peak solar project is planned to be developed at Kot Addu/Muzaffargarh on G2G mode, and the same has been offered to the Government of Kingdom of Saudi Arabia. To ensure a safe, secure, and quality-assured supply of solar and wind energy projects, products, systems, installation, and servicing, PPIB certified 149 new solar PV installers during July-February FY 2025 and reached 689. These certified installers have completed approximately 143,222 solar PV system installations, with a cumulative capacity exceeding 2,113 MW during this period. In Pakistan, six nuclear power plants (NPPs) are operating at two different sites with a total installed capacity of 3,530 MW. Chashma Nuclear Power Generating Station (CNPGS) near Mianwali comprises four units (Cl, C-2. C3 & C-4) with total capacity of 1330 MW Karachi Nuclear Power Station (KNPGS) has a total capacity of 2,200 MW and is located on Karachi coast. This station contains two units (K-2 & K-3) of the latest technology, termed as generation-III technology. KANUPP, the country's first nuclear power plant of 137 MW capacity, was permanently shut down in August 2021 after 50 years of operation and is in the decommissioning phase. Pakistan's NPPs operate well up to the mark despite the downturn in the annual demand of electricity. The low fuel cost, reliable supply, and technical expertise of PAEC position these NPPs at the forefront in the merit order prepared by NTDC for dispatch. Their combined capacity factor is 80 percent over the period of nine months during the current fiscal year, despite challenges on the demand side. The following table provides generation statistics for each unit. As of March 2025, the total installed electricity generation capacity reached 46,605 MW. Hydropower, nuclear, and renewable sources collectively constituted 44.4 percent of the installed capacity, an increase from prior years, while the proportion of thermal power declined to 55.7 percent. Regarding electricity generation, Pakistan produced a total of 90,145 GWh during the specified period, with 53.7 percent derived from hydropower, nuclear, and renewable sources, signifying a positive transition towards indigenous and environmentally sustainable energy solutions. Sectoral consumption patterns reveal the household sector as the predominant consumer, accounting for nearly half of the national electricity usage. Copyright Business Recorder, 2025
Business Recorder
05-06-2025
- Business
- Business Recorder
Minister calls for talks as net metering hits 2,500MW
ISLAMABAD: Federal Minister for Energy Sardar Awais Ahmad Khan Leghari has urged consultation to deal with the net metering which has now reached 2500 MW and has serious impact on the grid. On Wednesday a consultative meeting was held at the Private Power and Infrastructure Board (PPIB) regarding the transition from net metering to net billing and was attended by experts from the solar industry, representatives from relevant government institutions, provincial governments, and other stakeholders. While thanking all participants, the Federal Minister for Energy clarified that the government is not abolishing net metering, but is considering transforming its current framework into a more effective, transparent, and sustainable model. He averred that he himself had played a key role in introducing net metering back in 2017-18, when the system was still in its early stages. Net-metering connections: govt plans to digitalise process with new online portal Now that the scope of net metering has significantly expanded, it is having serious impacts on the national grid, which needs to be addressed in a timely manner. He emphasized that the government does not intend to harm any consumers or businesses, and that all decisions are being made in the national interest and with long-term energy sustainability in mind. He further clarified that the government is not demanding that net metering users sell electricity at the lowest possible rates. If there is any mention of unit purchases, discussions are ongoing about linking them to an energy purchase price, allowing the system to automatically adjust with fluctuations in rates. All such proposals are currently under consideration. He also highlighted that if net metering users have a payback period of around three years or less, it is considered a viable investment timeframe. If a user consumes 40% of their generated electricity, a three-year return on investment is an acceptable commercial model. These reforms are not meant to discourage, but rather to transition toward a better, more balanced, and sustainable system. During the meeting, the Federal Minister presented a comprehensive outline of ongoing energy reforms in the country. He stated that the government has terminated 9,000 MW worth of expensive and unnecessary projects that were burdening the electricity system. Additionally, by imposing a levy on captive power users, they were brought back to the grid, resulting in increased electricity demand. Since June 2024, cross-subsidy worth PKR 174 billion has been provided to industry, leading to up to 31% reduction in industrial electricity rates and a significant increase in consumption. He added that electricity tariffs for various consumers have decreased by 14% to 18%, which is evidence that government reforms are having a practical impact. Moreover, the government renegotiated contracts with large Independent Power Producers (IPPs), leading to a notable reduction in rates, and excluded unnecessary projects from long-term energy planning. The Federal Minister also stated that the government currently has 7,000 MW of surplus electricity, which can be supplied to the industrial and agricultural sectors at 7 to 7.5 cents per unit without any subsidies. The government has been consulting with the IMF for six months for approval of this scheme, despite no direct financial pressure. The goal is to balance electricity supply and demand, thereby strengthening the system and benefiting consumers. He also stressed that improving the grid is among the government's top priorities. Modern and efficient solutions are being developed for both integrated and off-grid systems. The Minister reaffirmed that all reforms are being carried out under an integrated strategy, and no decisions are being made hastily or on a temporary basis. 'This is the time to modernize our energy system,' he said. There will be positive progress on the suggestions provided by stakeholders, ensuring the process becomes more effective, comprehensive, and in everyone's best interest. Copyright Business Recorder, 2025
Business Recorder
03-05-2025
- Business
- Business Recorder
Coal-fired plant in Gwadar planned: CPPCL cites ‘snags' and ‘challenges'
ISLAMABAD: Chinese firm M/s CIHC Pak Power Company Limited (CPPCL), which plans to establish a 300 MW coal-fired power plant in Gwadar, has raised serious concerns over several critical challenges — including the approval of insufficient costs, exchange rate losses, and difficulties in converting foreign currency. In a letter addressed to Shah Jahan Mirza, Managing Director of the Private Power and Infrastructure Board (PPIB), CPPCL Chairman Zhao Bo stated that the company submitted the required Performance Guarantee (PG) on March 21, 2025, in compliance with PPIB's requirements. This extended the validity of the Letter of Support (LoS) to March 31, 2028, fulfilling all obligations under the LoS and PPIB's directives. Subsequently, on April 14, 2025, the company received a notice from PPIB requesting payment of the Financial Closing Date extension fee. Gwadar coal-fired power project in limbo over tariff dispute CPPCL emphasized that Clause 5 of the 2019 LoS clearly stipulates that 'delays caused by Government of Pakistan (GoP) entities' and 'events beyond the reasonable control of the Power Company' are valid grounds for exemption from the Financial Closing Date extension fee. Based on this clause, and after thorough evaluation, PPIB had approved the submission of the PG at the original amount — without requiring a doubled guarantee. 'In our previous communications with the Ministry of Planning, Development & Special Initiatives, and PPIB, we have detailed the reasons for the delays, including force majeure events and government-related delays, all of which are beyond the Power Company's reasonable control,' said Zhao Bo. He further argued that Clause 6 of the 2018 Fee Regulations must be interpreted in conjunction with Clause 5 of the LoS. According to him, PPIB's unilateral enforcement of the 2018 Fee Regulations violates key legal principles such as: (i) lexspecialisderogatlegigenerali (special law overrides general law),(ii) the principle of contractual reciprocity, and(iii) Pakistani laws and regulations that prohibit holding a party liable for losses without direct causation. Chairman Zhao warned that if PPIB enforces encashment of the PG solely due to non-payment of the extension fee, it would be a misuse of Clause 3 of the LoS, which limits PG encashment to scenarios involving 'failure to achieve the Financial Closing Date or execute agreements.' He also pointed to Clause 3A of the 2018 Fee Regulations — titled 'Exemption from Fees and Charges' — which applies to the LoS extension fee for this project. The regulation, effective July 1, 2022, states that power companies and sponsors are exempted from such payments if the delay in milestone achievement is due to timeline adjustments under IGCEP or attributable to government entities or factors beyond the sponsor's control. However, the exemption does not apply if the delay is also attributable to the power company or sponsor. Regarding the fee payment, CPPCL noted that the project has already incurred approximately $22 million in development costs, far exceeding NEPRA's approved cap of $10.5 million for development and owner management fees. Additionally, over $1 million has been paid in PPIB processing fees. Imposing further charges, the company argues, would severely impact the financial viability of the project. Nevertheless, to prevent further delays and safeguard the broader interests of the China-Pakistan Economic Corridor (CPEC), the company said it will pay $150,000 as a 'payment under protest' for the extension fee. This payment is made without prejudice to its right to: (i) seek compensation for excess costs through NEPRA with PPIB's support; (ii) recover unjust charges and related losses through legal or other means, and (iii) claim refunds under Clause 5 (Refund Clause) of the PPIB Fee Rules. The company also reiterated that despite receiving tariff approval with PPIB's support, it continues to face major challenges — including insufficient project cost approvals, exchange rate losses, currency conversion hurdles from the State Bank of Pakistan, tariff payment delays, and financing uncertainties. These challenges, it said, render the project commercially unviable in its current form. 'The true purpose of the LoS is to facilitate project advancement through PPIB's support,' the company stated, urging PPIB to act swiftly to resolve the issues that are threatening the project's commercial viability. The company affirmed its readiness to assist in finding solutions. Copyright Business Recorder, 2025
