Pakistan’s top business body questions 2026 power price plans

ISLAMABAD: The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has questioned the viability of the five Power Purchase Price (PPP) scenarios prepared by the Central Power Purchasing Agency-Guaranteed (CPPA-G) for the year 2026.

In a letter addressed to the NEPRA Registrar, the FPCCI stated that the projections for the upcoming year do not reflect prevailing market conditions. It warned that, if adopted without necessary corrections, these assumptions will worsen the affordability crisis for consumers and can further strain industrial operations.

The Central Power Purchasing Agency-Guaranteed (CPPA-G) is a government-owned company in Pakistan responsible for managing the country’s electricity market on behalf of the power sector.

According to the FPCCI, CPPA-G’s assumption of rising demand is inconsistent with on-ground realities. Electricity consumption has fallen due to high tariffs, reduced industrial output, factory closures, and a rapid shift toward rooftop solar and captive power. The chamber maintained that forecasting growth in a declining market produces unstable and inaccurate tariff structures.

CPPA-G maps out five power price scenarios for 2026

It added that the past PPP calculations did not fully incorporate solar displacement or actual demand behaviour. As a result, the quarterly adjustment swung from Rs -1.80 per unit to Rs +0.50 per unit. When demand is overestimated, fixed capacity costs are recovered from fewer units, automatically increasing quarterly adjustments. The FPCCI warned that continuing to ignore solar growth will lead to further unexpected surcharges.

The Power Purchase Price (PPP) refers to the cost at which electricity is bought from power generators under Power Purchase Agreements (PPAs).

Commenting on temporary relief measures without genuine cost reductions, the FPCCI said that short-term base tariff cuts merely shift the burden to future quarterly adjustments. This pattern has been repeated for several years and it consistently failed to address the structural weaknesses driving tariff escalation.

The country’s apex chamber also argued that the incremental package priced at Rs 22.98 per unit has been widely rejected because it does not reflect actual consumption patterns. It said the package creates inconsistencies for captive users, non-captive consumers, load-enhancement cases, and consumers seeking category changes. If incremental units fail to materialize due to unrealistic benchmarks, PPP and quarterly adjustments will increase further. The chamber reiterated that industry’s proposed uniform and logical framework must be adopted.

The FPCCI also reminded the NEPRA that load factors in the Consumer Service Manual (CSM) have become unrealistic due to economic slowdown and widespread adoption of solar solutions. It proposed implementing a 40% load factor across all industries to ensure realistic demand calculations.

To stimulate demand, the FPCCI has recommended revising the incremental package. It suggested modifications to the PPP so that the scheme’s primary purpose—encouraging additional consumption—can be achieved. Industry, the chamber said, is fully aligned and ready to increase demand if the proposed adjustments are implemented, which would help reduce the PPP by spreading fixed costs over a larger number of units.

The FPCCI further noted that to break the cycle in which high tariffs reduce demand and reduced demand pushes tariffs further upward, electricity prices must be brought down to nine cents per unit. This would incentivize a shift back from captive generation, improve competitiveness, slow the build-up of circular debt, and stabilize sector revenues.

The chamber lamented that despite NEPRA’s repeated emphasis on stakeholder engagement, industry has not been meaningfully included in discussions on the incremental package. Excluding key economic actors, it argued, leads to policies disconnected from operational realities. Immediate formal consultation is therefore essential.

The FPCCI observed that demand projections have been consistently inaccurate across tariff cycles, and the resulting surcharges demonstrate that current forecasting methodologies are misaligned with actual consumption behaviour. Unless corrected, consumers will continue paying for planning errors.

It also cautioned that the next federal budget—being prepared in consultation with the International Monetary Fund—may include requirements such as reducing power subsidies, shifting lifeline consumers to BISP, and cutting cross-subsidies across customer categories. Fixing tariffs for a full year without considering these potential changes, the FPCCI warned, could result in complications once budget measures are finalized.

“If demand falls below estimates and capacity cost per unit increases, even a five-percent demand gap can raise capacity charges by roughly Rs 1.40 to Rs 1.80 per unit. A ten-percent gap can increase them by more than Rs 3.00 per unit. This rise directly increases quarterly adjustments and the consumer-end tariff. We therefore urge a shift toward a more realistic, data-driven, and transparent approach,” the chamber concluded.

Copyright Business Recorder, 2025