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Business Recorder
30-04-2025
- Business
- Business Recorder
Reduced hydropower, costly fuels: Govt warns of potential hike in power bills
ISLAMABAD: The government on Tuesday warned of a potential hike in electricity bills during the summer months, citing reduced hydropower generation and greater reliance on expensive fuels — despite marginal negative adjustments under the Fuel Cost Adjustment (FCA) and Quarterly Tariff Adjustment (QTA) mechanisms. This was revealed by officials from the National Power Control Centre (NPCC) and Central Power Purchasing Agency – Guaranteed (CPPA-G) during public hearings held by the National Electric Power Regulatory Authority (Nepra) on FCA for March 2025 and the QTA for the third quarter of FY2024-25 (January–March). Nepra officials stated that the QTA is expected to result in a negative adjustment of Rs 1.52 per unit, applicable during May, June, and July 2025. Energy sector reforms: Govt makes new commitments to IMF Discos have sought a total reduction of Rs 51.493 billion, of which Rs 47.124 billion stems from lower capacity charges — Rs 16 billion due to contract terminations and Rs 17 billion through revised agreements with Independent Power Producers (IPPs). This adjustment will also apply to K-Electric consumers. Total savings from revised and terminated pacts was around Rs 91 billion as of now. For March's FCA, a negative adjustment of 3 paisa per unit has been requested, with an overall financial impact of Rs 250 million. However, when combined with the 90 paisa per unit already approved for April through June 2025, the net relief to consumers will be limited to 50 paisa per unit — excluding lifeline consumers. The actual reference fuel cost for March stood at Rs 9.2251 per unit, compared to a reference FCA of Rs 9.2560 per unit. CPPA-G CEO Rihan Akhtar confirmed that if the Rs 3.291 billion Prior Year Adjustment (PYA) had not been included, the FCA would have resulted in a higher positive impact on consumer bills. The NPCC General Manager assured that power generation would remain sufficient due to fuel availability, but noted that FCA costs will rise due to the use of more expensive fuels. The CPPA-G stated that there was 6 per cent reduction in electricity demand in March 2025 as compared to reference month of 2024, however a growth of 6 per cent has been witnessed in March as compared to February 2025. The NPCC noted that it transmitted 8.70 percent less energy in March as compared to the same month of 2024. It also shared details of routine outages and forced outages in the month due to which expensive plants were operated. During the session, Arif Bilwani and Amir Sheikh raised questions regarding fuel allocation, future power generation plans, and industry concerns. Sheikh criticized the lack of benefit to the industrial sector despite freeing up indigenous gas following the forced shift of captive power plants to the national grid. He demanded clarity on where this gas has been redirected and called for an increase in FPA refunds to industry. Bilwani said sarcastically that the government's officials should also apply their minds instead of totally depending on Allah's kindness. The hearing also saw Nepra Chairman Waseem Mukhtar express strong displeasure over the absence of senior officials from the Power Division and three key distribution companies—HESCO, MEPCO, and PESCO. He instructed Nepra staff to summon explanations from their CEOs and to issue a formal letter to the Secretary Power. 'If this QTA hadn't been negative and in favor of consumers, I would've returned the petitions filed by the Discos. Unfortunately, this is the culture we live in,' the Chairman remarked. Amir Sheikh urged that the QTA be implemented starting April to fulfill commitments made by the Prime Minister. 'If the relief starts in May, the rate reduction promised by the PM won't be realized,' he said. Tanveer Barry of the Karachi Chamber of Commerce and Industry (KCCI) highlighted poor performance of Discos in curbing theft and bill recovery. He noted that Pakistan's circular debt reached Rs 2.4 trillion in FY24—2.3% of GDP—while transmission and distribution losses for Discos and K-Electric were 20.1% and 16%, respectively. Barry also criticized the government's consideration of new commercial loans to reduce circular debt, warning that the burden would ultimately fall on law-abiding consumers. 'Electricity in Pakistan remains more expensive than in other regional countries. We need to begin working on lowering the base tariff for the next fiscal year — this three-month relief isn't enough,' he concluded. Copyright Business Recorder, 2025
Express Tribune
29-04-2025
- Business
- Express Tribune
Electricity prices may rise as hydropower output drops
Listen to article Consumers are likely to face higher electricity bills in May 2025 due to a drop in hydropower generation and increased reliance on expensive fuels to meet surging power demand. Electricity generation costs are expected to rise under the Fuel Cost Adjustment (FCA) for April, mainly due to a 20% increase in power demand and reduced hydropower output. To bridge the demand-supply gap, the government turned to costlier thermal power plants, pushing up generation expenses, said the General Manager of the National Power Control Centre (NPCC) during a public hearing held by the National Electric Power Regulatory Authority (NEPRA). The Central Power Purchasing Agency Guarantee Limited (CPPA-G) has submitted a request for a Rs0.0309/unit reduction in electricity tariff on account of FCA for April. However, NEPRA officials explained that, after adjusting for a larger negative FCA refund of Rs0.4641/unit paid in April, the net cost to consumers will effectively increase by Rs0.4332/unit in May. When asked about the continued absence of the Neelum-Jhelum hydropower project from the national grid, NPCC officials confirmed it remains offline with no timeline for its return. They noted that if not for prior year adjustment claims by distribution companies (Discos), the March FCA would have been positive as well. If approved, the minor FCA relief of Rs0.0309/unit for April would provide only Rs250 million in savings for consumers, NEPRA officials said. Despite the rise in FCA, the NPCC General Manager assured that there will be no shortage in electricity generation in the coming months, citing adequate fuel arrangements. The increase in FCA, he said, is solely due to reliance on higher-cost fuel sources. Backing NPCC's assessment, CPPA-G CEO Rihan Akhtar confirmed that costly fuel use will drive up FCA in the near term. During the hearing, participants also raised concerns about the long-term power generation strategy and the structure of FCA adjustments. Amir Sheikh noted that captive power plants were forced to shift to the national grid, freeing up indigenous gas and RLNG supplies, especially in Sindh and Khyber-Pakhtunkhwa. However, he criticised the lack of transparency in how this diverted gas was utilised and stressed that the industry should benefit from it through increased Fuel Price Adjustment (FPA) refunds. Quarterly adjustments In a separate development, NEPRA conducted another public hearing on the quarterly adjustment for the third quarter of FY202425. Consumers are set to receive a relief of Rs1.50/unit for three months, if the adjustment is approved. CPPA-G informed the hearing that power distribution companies (DISCOs) had submitted a relief request amounting to Rs51.493 billion for this period. NEPRA chairman chaired the session, which included participation from business leaders, journalists, and the general public. The authority expressed concern over the absence of senior officials from HESCO, MEPCO, and KESCO and decided to seek an explanation from the concerned Discos. The final decision, applicable to all distribution companies including K-Electric, will be issued after detailed scrutiny. KE noted in a statement that the request pertains to the JanuaryMarch 2025 period and includes charges related to system operations. XWDISCOS filed the request covering system operation charges. As per government rules, NEPRA's final decisiononce notifiedwill apply to all distribution company customers, including KE. The charges and billing period will be specified in the notification.
Business Recorder
25-04-2025
- Business
- Business Recorder
Projected savings of Rs1.567trn: Nepra clears revised PPAs of four GPPs
ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) on Thursday approved, in principle, the revised Power Purchase Agreements (PPAs) of four government-owned power plants (GPPs), with projected savings of Rs 1.567 trillion over the life of the projects. Estimated savings during the current fiscal year are expected to be Rs 21.56 billion. The four projects included in the revised PPAs are: (i) National Power Parks Management Company – Balloki (1223MW); (ii) National Power Parks Management Company - Haveli Bahadur shah (1230 MW); (iii) Central Power Generation Company Limited - 747 MW (747 MW) and; (iv) Northern Power Generation Company Limited (525 MW)- Nandipur. During a public hearing chaired by Nepra Chairman Waseem Mukhtar, CPPA-G CEO Rihan Akhtar informed the Authority that the revised agreements for the RLNG-based power plants (Balloki and Haveli Bahadur Shah) will take effect from January 1, 2025. The revised PPAs for Nandipur and Guddu 747 MW will become effective on February 1, 2025. He clarified that no changes have been made to the lifespan of the projects. Tanveer Barry, representing the Karachi Chamber of Commerce and Industry (KCCI), asked how the revised PPAs would affect capacity payments, which currently stand at Rs 2 trillion, and what direct relief consumers might expect on electricity bills. Arif Bilwani sought detailed figures on the current and revised capacity payments for the GPPs, and the estimated annual and lifetime savings. Rehan Jawed proposed using a blend of RLNG and indigenous fuels to further reduce generation costs, while Aamir Sheikh asked whether the project life spans would be extended under the new agreements. The plant-wise estimated saving impact will be as follows ;(i) CPGCL-747 (Rs 0.2482 per unit) ;(ii) NPGCL-Nandipur (Rs 0.3216 per unit ;(iii) NPPMCL-Haveli Bahadr Shah (Rs.0.2725 per unit) and ;(iv) Balloki Power Project (Rs 0.2600 per unit) On a question from Chairman Nepra, the officials stated that Guddu 747 MW is being operated without insurance as a couple of attempts to get it insured remained unsuccessful. Member KPK grilled the officials for not clearly giving a response that the plant is running without insurance which is great risk. In response to a question raised by Member (Law) NEPRA, Amina Ahmed, CEO CPPA-G stated that there are indications that all government owned Gencos except Guddu and Nandipur will be decommissioned. Both Guddu and Nandipur are on the privatisation list for the second phase. According to CEO CPPA-G, cardinals of negotiations are as follows:(i) RoE foreign fixed at 13 per cent at Rs 168/$ with no future indexation whereas RoE beyond 35 per cent shall be paid on units delivered (ie, take and pay) basis; (ii) insurance component as per actual or 0.9 per cent of the EPC for Gencos whichever is lower. Insurance component as per actual or 0.8 per cent of the sum insured for GPPs, whichever is lower; (iii) Indexation-O&M: local O&M shall be indexed at 5 per cent or 12 months' average NCPI whichever is lower; 30 per cent discount on foreign O&M indexation in case of Rupee devaluation against US dollar and 100 per cent benefit will be passed on to the consumers in case of Rupee devaluation against US dollar. Responding to another question, CEO CPPA-G explained that during talks on the revised PPAs of GPPs it was felt that the projects are low cost and running on dedicated gas, these must have insurance component which was capped at 0.8 per cent, adding that payment of insurance will be made at that time when they will do insurance and incurred cost will materialise. He requested that the provision of 0.8 per cent insurance cost be allowed/approved in the revised PPAs. The purpose of this step is to ensure that the project's operation should not be suspended in any eventuality. The CEO CPPA-G submitted the following proposals before the Authority: (i) RoE & RoEDC be revised at 13 per cent at fixed exchange rate of Rs 168/$; (ii) hybrid take and pay mechanism be approved beyond 35 per cent on units delivered basis ;(iii) O&M local indexation be allowed; lower of 5 % or annual average NCPI (annual); and (iv) O&M foreign indexation be allowed as per revised mechanism. The CEO said that reduction in CPP will directly impact reduction in capacity charges imposed on Discos. According to an official statement, further reforms include capping the indexation for Operations & Maintenance (O&M) costs to 70% of rupee devaluation, down from the previous 100%. Local O&M expenses will now be indexed to either 5% or the 12-month average of the National Consumer Price Index (NCPI), whichever is lower. Additionally, the return on equity (ROE) structure has been rationalized. Plants will now receive 35% of the ROE as fixed, with the remaining 65% linked directly to the actual operation of the plant — a significant departure from the previous 100% guaranteed ROE model. These prudent measures will result in a projected saving of Rs. 1.6 trillion over the life of the projects, including Rs. 22 billion in the current financial year alone. The hearing, attended by sector professionals and members of the public, was met with wide appreciation. Citizens commended the Authority's commitment to fiscal responsibility and its proactive role in ensuring a sustainable and consumer-friendly power sector. The Nepra remains steadfast in its mission to implement reforms that ensure transparency, efficiency, and affordability in the power sector. The Nepra will issue detailed determination on the revised pacts within a couple of weeks after verification of all denouements. Copyright Business Recorder, 2025
