ISLAMABAD: The country’s industry has requested National Electric Power Regulatory Authority (NEPRA) to summon the Managing Director National Grid Company of Pakistan (NGC) at its November 3 hearing on the proposed power purchase price (PPP) for CY2027 to explain transmission constraints allegedly costing consumers more than Rs400 billion annually.
In written objections submitted to Registrar NEPRA, Rehan Javed, a representative of FPCCI has challenged the Central Power Purchasing Agency-Guaranteed’s (CPPA-G) proposed CY2027 reference of Rs27.309 per unit against the existing approved rate of Rs25.32 per unit, an increase of Rs1.989 per unit, translating into an additional burden of approximately Rs366 billion.
He has argued that the proposed reference should not be determined until NGC, formerly the National Transmission and Despatch Company (NTDC), quantifies the financial losses caused by north-south transmission constraints and other grid limitations.
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According to the objections, the north-south transmission constraint alone costs the power sector more than Rs400 billion annually, equivalent to approximately Rs3.07 per unit, as reportedly disclosed during NEPRA’s hearing on July 29, 2026.
The objector maintained that this amount exceeds the entire increase sought by CPPA-G in its proposed CY2027 reference.
He pointed out that the proposed PPP was based on assumed power generation and dispatch patterns, but CPPA-G had not provided comparative scenarios showing the cost of electricity generation with and without transmission constraints.
The objections further highlighted that CPPA-G had reduced the assumed north-south power transfer capacity from 5,000 MW, following the commissioning of Lahore North, to 4,800 MW without providing any explanation.
The petitioner argued that cheaper electricity generated in southern parts of the country could not be fully transmitted to northern load centres because of transmission bottlenecks, forcing the system to operate expensive power plants out of merit order while cheaper generation remained curtailed.
Consequently, consumers were allegedly paying both for the capacity of plants that remained underutilised and for more expensive electricity dispatched to meet demand.
He demanded that NGC present a detailed assessment of the financial impact of these constraints, including the actual power transfer achieved against assumed capacity, energy curtailed, additional costs of out-of-merit dispatch and capacity payments made to plants that could not be fully utilised.
The presentation should also provide firm commissioning dates for Lahore North and Matiari transmission infrastructure and quantify the impact of constraints on the CY2027 PPP, both with and without the constraints.
The objections also questioned the reliability of data submitted by CPPA-G, Independent System and Market Operator (ISMO) and other power-sector entities, particularly following discrepancies highlighted during NEPRA’s recent hearing on the September 2026 Fuel Charges Adjustment (FCA).
According to the objector, figures presented by ISMO and CPPA-G during the hearing did not match the data previously submitted to the regulator.
He also referred to conflicting positions taken by NGC and ISMO on transmission constraints during a July hearing, while CPPA-G’s CY2027 report itself reportedly described its figures as indicative, disclaimed their accuracy and acknowledged that data relating to net metering and captive generation had not been received.
The objector argued that the regulator could not determine a reference affecting electricity consumers across the country on the basis of figures that the submitting entities themselves could not reconcile.
He demanded independent verification of all data used in the CY2027 determination, with each figure formally endorsed by the chief executive of the concerned organisation.
Another major objection relates to the role of the Power Planning and Monitoring Company (PPMC) and CPPA-G in responding to questions concerning transmission constraints, corridor capacity and grid reinforcement requirements during regulatory hearings.
Javed maintained that neither PPMC nor CPPA-G owns, plans or operates the transmission system and, therefore, cannot be held accountable for technical explanations relating to NGC’s network.
He urged NEPRA to stop accepting proxy answers from these entities on transmission-related matters and make the personal attendance of NGC’s MD/CEO mandatory at all future PPP and FCA hearings.
The objections also drew attention to the increasing contribution of non-fuel costs to electricity tariffs, arguing that fuel costs were no longer the principal driver of tariff increases.
According to the comparison of NEPRA’s national average tariff determinations for XWDISCOs cited in the objections, the energy charge declined from Rs10.20 per unit in FY2022-23 to Rs9.12 per unit in CY2026, a reduction of Rs1.08 per unit.
In contrast, capacity charges increased by Rs6.49 per unit, from Rs11.07 to Rs17.56, representing a rise of approximately 59 percent.
Similarly, transmission charges, including Use of System Charges (UoSC), increased by Rs1.18 per unit, from Rs1.01 to Rs2.19, while distribution margins rose by Rs1.93 per unit, from Rs2.16 to Rs4.09.
Thus, capacity charges, transmission costs and distribution margins collectively increased by Rs9.60 per unit, exceeding the Rs8.56 increase in the national average tariff, which rose from Rs24.82 to Rs33.38 per unit.
The objector maintained that DISCOs, NGC, CPPA-G, PPMC and ISMO were continuously adding staff, increasing expenditure and seeking higher revenue requirements, with insufficient linkage between their costs and operational performance.
He proposed that NEPRA direct all these entities to submit their headcount, salary expenditure and operation and maintenance costs per unit for the preceding three years.
He also called for the introduction of annual efficiency factors and performance-based conditions for distribution margins and UoSC, linked to loss reduction, recovery performance and network availability.
In his prayer to the regulator, Javed sought directions for CPPA-G to submit a month-wise comparison of determined references against actual fuel and capacity costs for FY2025-26 and January-September 2026, together with the corresponding FCA and Quarterly Tariff Adjustments (QTA).
He argued that consumers had already faced the consequences of understated fuel references, citing the June 2026 fuel reference of Rs7.7138 per unit against an actual cost of Rs8.9138 per unit.
He also referred to CPPA-G’s request for a further positive FCA of Rs2.5624 per unit for September 2026 against a reference of Rs7.4596 per unit.
According to the objections, the practice of setting lower references and subsequently recovering the difference through FCA and QTA adjustments shifts the actual financial burden to consumers, while other inefficiencies and rising expenditures of power-sector entities remain inadequately scrutinised.
The objector has asked NEPRA to disallow transmission constraint and inefficiency costs that are not prudently incurred, both at the reference determination stage and through subsequent FCA and QTA adjustments.
He has also urged the regulator to restrict the proposed CY2027 reference to the existing approved level of Rs25.32 per unit rather than allowing the increase sought by CPPA-G.
Javed has requested an opportunity to present his objections at the November 3, 2026 hearing and urged NEPRA not to determine the CY2027 reference until NGC’s detailed presentation on transmission constraints is placed on record and examined by the Authority.
Copyright Business Recorder, 2026
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