KAPCO urges Nepra to rectify its recent tariff order

ISLAMABAD: The Kot Addu Power Company Limited (KAPCO) has urged the National Electric Power Regulatory Authority (Nepra) to clarify and rectify its recent tariff order to ensure regulatory consistency and safeguard grid stability, warning that ambiguity over tariff validity could disrupt system support in southern Punjab, sources in Nepra told Business Recorder.

In a formal communication to Nepra Chairman, KAPCO’s Chief Executive Officer Shahab Qader Khan called for explicit confirmation that the company’s tariff for its 495MW Combined Cycle Power Plant (CCPP) remains valid for the full three-year period allowed under the Tripartite Power Purchase Agreement (TPPA).

Khan cautioned that without a valid tariff framework, KAPCO would have “no legal or financial basis” to keep its generation facility operational for grid support — a move that could expose the MEPCO region and the national transmission system to operational vulnerabilities.

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Nepra’s order of September 23, 2025, had stated that the tariff would apply “till September 2025, subject to extension based on the approved IGCEP/PAP,” with a maximum term of three years.

However, the company contends that the order’s reliance on outdated grid projections under IGCEP 2022–31 no longer reflects current realities or the Authority’s own subsequent determinations.

KAPCO pointed out that both the Power Acquisition Plan (PAP 2022–27) and the draft Transmission System Expansion Plan (TSEP 2025) reaffirm the continued system dependence on KAPCO’s 500MW capacity beyond FY 2025–26 due to incomplete transmission upgrades at Vehari and Nagshah.

The PAP noted that KAPCO’s generation “will be required till FY 2025–26, after which it may not be required” pending completion of new grid infrastructure, while the TSEP stressed that these projects remain delayed — keeping KAPCO’s role essential for “secure system operation.”

Reinforcing this position, Nepra’s own generation licence extension order cited NTDC’s submission that 500MW from KAPCO will remain necessary until at least June 2027, particularly during peak summer months to meet regional demand in MEPCO.

“These official records collectively demonstrate that the Authority’s recent order requires alignment with current system needs and planning assumptions,” Khan noted.

KAPCO has; therefore, requested Nepra to explicitly confirm that its 495MW tariff shall either: (i) remain valid until September 2028 (covering the three-year term allowed under the TPPA); or (ii) continue until completion of the Vehari and Nagshah substations, whichever occurs earlier.

Failure to provide this clarification, KAPCO warned, could undermine grid reliability, disrupt operational planning, and contradict policy goals of optimizing existing generation capacity before commissioning new plants.

“The company’s request aligns fully with the government’s objectives to ensure a reliable power supply and minimize consumer costs through efficient use of available assets,” Khan concluded.

Copyright Business Recorder, 2025