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Express Tribune
2 days ago
- Business
- Express Tribune
Govt set to lift surcharge cap on electricity bills
The federal government is planning to impose additional surcharges on electricity consumers by amending the National Electric Power Regulatory Authority (NEPRA) Act, a move that would allow it to unilaterally increase electricity bills, sources said on Wednesday. According to official sources, the proposed amendment to the NEPRA Act will empower the government to exceed the current 10% cap on electricity surcharges, paving the way for higher charges on consumer bills. Sources said the government was preparing to remove the existing 10% limit on surcharges levied through power bills, with the new legal framework granting it broader authority to determine tariff hikes on a case-by-case basis and for specified durations. A proposal is also under consideration to charge consumers an additional Rs3.23 per unit as a surcharge. However, a final decision regarding the increase has not yet been made, sources clarified. In the past, surcharges collected from electricity bills were primarily used to pay interest on the growing circular debt. The government is now aiming to eliminate the circular debt altogether by borrowing Rs1,275 billion from commercial banks.
Business Recorder
17-05-2025
- Business
- Business Recorder
Ready to help build robust framework: APTMA questions Nepra's tariff-setting capacity
ISLAMABAD: The All Pakistan Textile Mills Association (APTMA) has questioned the capacity of National Electric Power Regulatory Authority (Nepra) to formulate power tariffs and offered to assist in developing a framework that is technically robust, economically just, and strategically aligned with Pakistan's development objectives. The intervention comes at a time when Nepra is reviewing the assumptions submitted by the Power Division and the Central Power Purchasing Agency-Guaranteed (CPPA-G) for finalizing the Power Purchase Price (PPP) for FY 2025–26. Aptma's letter to Nepra was issued amid widespread criticism from the business community, which contends that the assumptions behind the proposed tariffs are disconnected from economic realities. The letter highlights several overlooked market dynamics that directly affect the credibility and sustainability of the proposed PPP forecasts. Peak-hour power tariff: APTMA urges govt to share constraint details Key issues raised include the shift from captive power to the national grid, a significant reduction in grid demand due to the rise in behind-the-meter and rooftop solar photovoltaic (PV) systems, unrealistic international fuel price projections, and systemic inefficiencies. Aptma specifically criticized CPPA-G's projected electricity demand growth of 2.8% to 5% for FY 2025–26, calling it disconnected from sectoral realities. According to Aptma, the rapid uptake of solar PV—driven by high grid tariffs, load shedding, declining installation costs, and the competitive Levelized Cost of Energy (LCoE)—has fundamentally altered demand patterns. In 2024 alone, over 17 GW of solar PV modules were imported, with approximately 15 GW now operational and generating an estimated 21.9 TWh annually—equivalent to 14% of national electricity consumption. Despite this major development, CPPA-G's model makes no reference to solar net metering or the impact of rooftop PV generation. 'Load dips during peak solar hours and reverse power flows have become common across DISCOs, yet the PPP model remains static and fails to reflect this systemic disruption,' Aptma stated. The association warned that ignoring BTM generation could lead to miscalculating idle capacity costs and accelerating grid defection. Aptma also flagged concerns over the inequitable industrial tariff structure. It argued that high-voltage consumers—who maintain their own infrastructure and cause minimal technical losses—are charged higher per-unit rates than lower-voltage users (B2 category), in violation of cost-of-service principles under Section 31(2)(f) of the NEPRA Act. This pricing mismatch, Aptma noted, is incentivizing industries to split their loads into multiple low-voltage connections to escape punitive tariffs. The result is distorted demand patterns, inflated low-tension (LT) losses, and poor forecasting accuracy—contrary to Competitive Trading Bilateral Contract Market (CTBCM) principles. APTMA criticized the application of fixed charges based on 25% of sanctioned load or actual Maximum Demand Indicator (MDI), whichever is higher. This approach can inflate effective tariffs by Rs. 5–13/kWh for underutilized industries. It recommended aligning fixed charges with actual recorded demand and called on NEPRA to standardize the treatment of MDI-based charges to enhance transparency and competitiveness. Fuel price assumptions were also deemed outdated. CPPA-G based its model on a Brent crude price of $72–74 per barrel. In contrast, Goldman Sachs and JPMorgan have projected price of $56–$66 per barrel for 2025–26, citing weaker global demand and increased OPEC+ supply. Aptma recommended using $60 as a central assumption, with a downside scenario of $56, aligned with data from Platts and Argus. The letter further criticized the lack of transparency in the modeling of the Capacity Purchase Price (CPP), which forms the bulk of the PPP—ranging from Rs. 16.04 to Rs. 16.80/kWh. CPPA-G's reporting aggregates CPP data, without providing plant-wise or technology-specific utilization rates. Aptma emphasized the need for generator-wise CPP disclosures and the implementation of performance benchmarks to ensure value-based payments. Another significant omission highlighted was the role of captive power generation. Due to high tariffs and the imposition of a Grid Transition Levy, captive users now face an effective gas price of $15.38/MMBTU, despite indigenous wellhead gas being priced at $4/MMBTU. This pricing regime has rendered captive plants economically unviable, leading to a 225 MMCFD drop in captive gas offtake and an RLNG surplus of 450 MMCFD—equivalent to 54 LNG cargoes annually. APTMA stated that 92,594 BBTU of high-cost RLNG (about 31 cargoes) has been diverted to residential users, incurring a cost of Rs. 299.9 billion at an average cross-subsidy rate of Rs. 3,239/MMBTU. This diversion significantly contributed to the increase in SNGPL's Estimated Revenue Requirement (ERR), which jumped by Rs. 707.37/MMBTU for FY 2025–26. The Association lamented the absence of integrated energy planning, which has led to structural inefficiencies across the energy value chain. Key decisions in the power and gas sectors are being made in silos, resulting in mismatches between RLNG procurement and actual demand, underutilized thermal capacity, and unsustainable cross-subsidies. APTMA stressed that the existing approach is financially unsustainable and could trigger a broader liquidity crisis in both public and private energy institutions. It urged NEPRA to require CPPA-G to adopt an integrated, unified energy planning framework that aligns demand forecasts, capacity procurement, and fuel supply strategies with real-world consumption and policy realities. Wrapping up the letter, Aptma called on Nepra to adopt a forward-looking, data-driven approach that reflects Pakistan's evolving energy landscape. The current CPPA-G models, while procedurally compliant, fail to account for major behavioral, technological, and structural shifts affecting electricity demand, fuel economics, and cost recovery. Addressing these gaps through integrated planning, transparent cost disclosures, and realistic demand forecasting is critical to ensuring industrial competitiveness, equitable tariff allocation, and the financial viability of Pakistan's energy sector. Aptma reaffirmed its readiness to collaborate with Nepra to develop a tariff framework that is both technically sound and aligned with the nation's broader economic goals. Copyright Business Recorder, 2025
Express Tribune
27-02-2025
- Business
- Express Tribune
NEPRA imposes Rs10m fine on NTDC
The National Electric Power Regulatory Authority (NEPRA) has imposed a fine of Rs10 million on the National Transmission and Despatch Company (NTDC) due to its negligence in maintenance work that resulted in accidents. In a verdict, NEPRA directed the NTDC to submit the fine within three months. It stated that established SOPs were not followed during maintenance work. NEPRA also ordered compensation for the affected employees and their families. It said failure to adhere to safety protocols was a violation of the NEPRA Act. The accidents raise serious concerns about NTDC's performance and capabilities, it added. The authority said it had instructed the NTDC to conduct an inquiry into the accidents. Despite the passage of eight months, the company failed to submit the final inquiry report. The NTDC is a power transmission company managed by the Ministry of Energy of Pakistan. It was separated from WAPDA in 1998. The company owns all 220 KV and 500 KV grid stations and transmission lines in Pakistan.
