ISLAMABAD: The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has urged National Electric Power Regulatory Authority (Nepra) to reconsider the cost escalations and adjustments proposed by the Water and Power Development Authority (Wapda) in its tariff petition for the fiscal year 2025–26.
In a letter addressed to the Nepra Registrar, FPCCI stated that the increases proposed in the petition would significantly raise the cost of hydropower—adding approximately Rs 1–2 per unit to the net tariff. This development, the letter warned, could overshadow the government’s considerable efforts to provide electricity relief, once again burdening industries with unaffordable power.
The logical way forward must be reforms to reduce costs and enforce efficiency, not increases in tariffs. Unless this principle is maintained, there is a risk of undoing the very relief that has been extended through extraordinary efforts of the government.
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According to the letter, Wapda is seeking a 91 percent increase in its allowed revenue - from Rs 191 billion in FY 2022-23 to roughly Rs 365 billion in FY 2025-26. If approved, this would effectively double the bulk hydropower tariff from about Rs 6.10 per kWh to Rs 11.55 per kWh. FPCCI contended that such an escalation is unjustified and will inflict severe harm on Pakistan’s economy, especially the industrial sector, through higher power costs, inflationary pressure, and eroded export competitiveness.
Wapda has sought an escalation of Operations & Maintenance (O&M) allowances by 67 percent within three years. This far outpaces inflationary pressures and suggests inefficiency. With mature hydropower assets, O&M per unit should be falling, not rising. FPCCI requested Nepra to reconsider the O&M request and limit increases to inflation linked allowances, contingent upon measurable efficiency improvements.
Depreciation claims are being made on projects with cost overruns and delays, without submission of revised PC-I approvals. In some cases, such as Neelum Jhelum, assets have remained non-operational for extended periods. Consumers should not be burdened with depreciation on incomplete or idle projects.
FPCCI requested Nepra to reconsider these claims and only allow prudently incurred and approved costs tied to operational assets.
Applying Return on Existing Assets (WACC)-based returns to Wapda as if it were an independent power producer is unjustified. As a state-owned entity, its commercial risks are minimal. Hydel power - once Pakistan’s cheapest - should not be burdened with excessive returns.
Copyright Business Recorder, 2025
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