EDITORIAL: What the power sector’s planners have produced for 2026 is not a roadmap, it is a warning about how detached official modelling has become from the economy it is supposed to serve. The five Power Purchase Price (PPP) scenarios prepared by the Central Power Purchasing Agency — Guaranteed (CPPA-G), and now questioned by the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), are built on assumptions that bear little resemblance to conditions on the ground. That would be troubling in any year. In the middle of an affordability crisis and a collapsing industrial base, it is almost shameful.
The chamber’s central objection is simple. CPPA-G is forecasting rising demand in a market where demand is visibly shrinking. High tariffs, reduced industrial output, factory closures and a rapid shift towards rooftop solar and captive generation have already pushed electricity consumption down. To layer optimistic growth assumptions on top of this slump is not planning; it is wishful thinking that will feed straight into distorted tariffs.
The consequences are already visible in recent history. Past power purchase calculations did not properly account for solar displacement or actual demand behaviour, and the result was violent swings in quarterly adjustments, 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 driving up quarterly adjustments. The FPCCI’s warning is explicit. If solar growth continues to be ignored, the system will deliver more unexpected surcharges, not stability.
The chamber also calls out the habit of cosmetic relief. Temporary cuts in the base tariff, without any genuine reduction in underlying costs, simply reappear later in quarterly adjustments. This pattern has been repeated for years and has never addressed the structural weaknesses that keep pushing tariffs higher. Short-term relief has become a way of postponing hard decisions, and consumers end up paying for the arithmetic later.
The incremental package priced at Rs22.98 per unit illustrates the problem. According to FPCCI, industry has rejected it because it does not reflect real consumption patterns. It creates inconsistencies for captive users and non-captive consumers, complicates load enhancement cases and confuses those seeking category changes. If incremental units do not actually materialise because the benchmarks are unrealistic, both the power purchase price and quarterly adjustments will rise again. The chamber is not asking for special favours; it is asking for a uniform and logical framework that matches how industry really uses power.
Even the basic tools of forecasting are out of date. Load factors in the Consumer Service Manual have become unrealistic in an economy marked by slowdown and widespread adoption of solar solutions. FPCCI has proposed a 40 percent load factor across all industries to bring demand calculations closer to reality. If regulators continue to rely on obsolete assumptions, they will continue to produce tariffs that punish both producers and users.
The alternative outlined by industry is straightforward. Revise the incremental package, adjust the power purchase design, and treat demand stimulation as a serious policy goal rather than a slogan. If tariffs are brought down to a level that restores competitiveness, the chamber argues, industry is ready to raise consumption again. That in turn would allow fixed capacity costs to be spread over a larger number of units, which is the only durable way to pull the power purchase price down.
The cost of getting this wrong is not theoretical. FPCCI’s own sensitivities show that if actual demand falls just 5 percent below estimates, capacity charges can rise by roughly Rs1.40 to Rs1.80 per unit; a 10 percent gap can push them up by more than Rs3.00 per unit. Those increases flow directly into quarterly adjustments and on to the consumer’s bill. In other words, every percentage point of forecasting error has a price.
The regulator has repeatedly spoken about stakeholder engagement. Industry says it has not been meaningfully heard. That gap lies at the heart of the present dispute. Until tariff design becomes genuinely data driven, transparent and grounded in how factories, businesses, and households actually behave, CPPA-G’s scenarios will remain exercises in abstraction. The country cannot afford another year in which consumers pay for planning errors.
Copyright Business Recorder, 2025
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