The Central Power Purchasing Agency (CPPA-G) has proposed an approximately 8% increase in the average power purchase price for distribution companies in 2027, raising it to Rs27.309 per unit from the Rs25.320 approved for 2026.
The National Electric Power Regulatory Authority (NEPRA) held a public hearing on Tuesday to examine the proposal, which will provide the basis for rebasing consumer-end electricity tariffs from January 1, 2027.
Under its base-case scenario, CPPA-G projected total power purchase costs of Rs3.552 trillion against estimated electricity sales of 130,081 gigawatt-hours (GWh). The projections assume demand growth of 2.6% and no load-shedding.
Capacity Payments Account for Largest Share
Capacity payments make up the largest portion of the projected power purchase costs, reaching Rs1.914 trillion, equivalent to Rs14.717 per unit.
Fuel costs are estimated at Rs1.319 trillion, or Rs10.141 per unit, while transmission and market-related charges are projected at Rs248.3 billion.
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CPPA-G presented six pricing scenarios during the hearing. The average power purchase price ranges from Rs25.883 per unit under the ideal scenario to Rs29.255 per unit under the worst-case scenario.
Exchange Rate and Inflation Assumptions Under Review
The base-case projections assume an exchange rate of Rs279 against the US dollar, domestic inflation of 8.2% and a Karachi Interbank Offered Rate (KIBOR) of 11.7%.
NEPRA directed CPPA-G to revise its KIBOR assumption to 12%, a change that could affect the projected electricity purchase costs.
During the hearing, NEPRA Chairman Waseem Mukhtar sought clarification on several assumptions, including regasified liquefied natural gas (RLNG) supplies, exchange rates, Brent crude oil prices and differences in electricity demand forecasts.
Industrial Sector Raises Objections
Industrial representatives opposed continuing the incremental electricity package, arguing that it benefited a limited number of industries while shifting additional costs onto other consumers.
They also questioned the high capacity payments despite previous negotiations with independent power producers (IPPs).
Industry representatives called for reductions in transmission losses, administrative expenses and dependence on expensive imported fuels.
They urged NEPRA to ensure that the average consumer-end electricity tariff remained below the 2026 level of Rs33.38 per unit.
Industry Seeks Greater Transparency
Industrial stakeholders also called for greater transparency in fuel cost adjustments, electricity demand projections and transmission constraints before NEPRA finalises its determination.
The regulator’s review will help establish the power purchase cost framework for 2027, which will contribute to the next round of consumer electricity tariff calculations.
