CPPA-G maps out five power price scenarios for 2026

ISLAMABAD: The Central Power Purchasing Agency–Guaranteed (CPPA-G) has tailored five scenarios for the Power Purchase Price (PPP) based on different projections for the year 2026, applicable from January to December.

The National Electric Power Regulatory Authority (Nepra) has announced that it will hold a public hearing on November 18, 2025, on the petition submitted by CPPA-G.

The five proposed scenarios were prepared using sensitivity analysis based on variations in demand, hydrology, fuel prices, and exchange rates. In Scenario 1, CPPA-G has projected the PPP at Rs 25.95 per unit; Scenario 2 at Rs 26.53 per unit; Scenario 3 at Rs 25.73 per unit; Scenario 4 at Rs 26.20 per unit; and Scenario 5 at Rs 25.69 per unit.

FY2025-26: CPPA-G projects Re0.30-Rs2.25 cut in power purchase price

According to official documents duly approved by the federal cabinet: Scenario 1 assumes a 1 percent increase in electricity demand, an exchange rate of Rs 280 per USD, and normal hydrology and fuel prices; Scenario 2 assumes a 1 percent increase in demand, normal hydrology and fuel prices, and an exchange rate of Rs 300 per USD; Scenario 3 assumes a 2.5 percent increase in demand, an exchange rate of Rs 300 per USD, and normal hydrology and fuel prices Scenario 4 assumes a 1 percent increase in demand, an exchange rate of Rs 330 per USD, normal hydrology, and high fuel prices and scenario 5 assumes a 1 percent growth in electricity demand during 2026, an exchange rate of Rs 300 per USD, normal hydrology, and low fuel prices.

Other parameters common to all five scenarios include: US inflation at 2.30 percent, KIBOR at 11.00 percent, LIBOR/SOFR at 4.47 percent, Pakistan inflation at 7.74 percent, transmission charges at Rs 300/kW/month, PMLTC transmission charges at Rs 225/kW/month, Market Operator Fee (MOF) at Rs 9.08/kW/month, and NTDC losses at 2.60 percent.

In Scenario 1, CPPA-G projects a sale of 125,822 GWh at a cost of Rs 999,469 million, with a fuel cost of Rs 7.94 per unit, variable cost of Rs 50,106 million (Rs 0.40/kWh), capacity charges of Rs 1,974,604 million (Rs 15.69/kWh), and a total PPP of Rs 3,024,177 million (Rs 24.04 per unit). Including transmission charges and MOF of Rs 1.91 per unit, the total price is Rs 25.95 per unit.

In Scenario 2, projected sales are 125,822 GWh at a cost of Rs 1,024,504 million, with a fuel cost of Rs 8.14 per unit, variable cost of Rs 51,001 million (Rs 0.41/kWh), capacity charges of Rs 2,022,158 million (Rs 16.07/kWh), and a PPP of Rs 3,097,663 million (Rs 24.62/kWh). Including transmission charges and MOF, the total price is Rs 26.53 per unit.

In Scenario 3, projected sales are 127,815 GWh at a cost of Rs 1,023,006 million, with a fuel cost of Rs 8.14 per unit, variable cost of Rs 51,245 million (Rs 0.40/kWh), capacity charges of Rs 1,974,602 million (Rs 15.45/kWh), and a PPP of Rs 3,048,853 million (Rs 23.85/kWh). Including transmission charges and MOF, the total price is Rs 25.73 per unit.

In Scenario 4, projected sales are 125,822 GWh at a cost of Rs 1,031,652 million, with a fuel cost of Rs 8.20 per unit, variable cost of Rs 50,106 million (Rs 0.40/kWh), capacity charges of Rs 1,974,602 million (Rs 15.69/kWh), and a PPP of Rs 3,056,360 million (Rs 24.29/kWh). Including transmission charges and MOF, the total price is Rs 26.20 per unit.

In Scenario 5, projected sales are 125,822 GWh at a cost of Rs 967,286 million, with a fuel cost of Rs 7.69 per unit, variable cost of Rs 50,106 million (Rs 0.40/kWh), capacity charges of Rs 1,974,602 million (Rs 15.69/kWh), and a PPP of Rs 2,991,994 million (Rs 23.78/kWh). Including transmission charges and MoF, the total price is Rs 25.69 per unit.

According to the CPPA-G, the PPP forecast has been submitted to the Authority for consideration in setting monthly PPP references for CY (calendar year) 2026, prepared following extensive consultations conducted with the relevant stakeholders in accordance with the regulatory framework. It is pertinent to highlight that the results/outputs provided herein are indicative in nature and may change on account of variation of underlying assumptions set, including commissioning schedules, future generation fleet, fuel prices, demand forecasts, exchange rate parity, and inflation.

Moreover, monthly references for power purchase price presented in the report do not account for differential adjustments that may be allowed/disallowed, as the case maybe.

Accordingly, CPPA-G has suggested that the Authority may take into account the projection of Power Purchase Price references outlined in the report, along with its independent assessment, to arrive at the finalized PPP references CY 2026.

Copyright Business Recorder, 2025