PPIB holds talks with stakeholders: USD2.3bn project to deploy 16.2m AMI meters envisaged

ISLAMABAD: The Private Power and Infrastructure Board (PPIB) has initiated consultations on a proposed USD2.3 billion project to deploy around 16.2 million electricity meters equipped with Advanced Metering Infrastructure (AMI) across selected power distribution companies (Discos) through public-private partnerships, amid concerns raised by the business community over its cost, payment structure and potential burden on consumers.

The project envisages replacing single-phase electricity meters in five distribution companies, including Lahore Electric Supply Company (LESCO), Multan Electric Power Company (MEPCO), Peshawar Electric Supply Company (PESCO), Quetta Electric Supply Company (QESCO) and Hazara Electric Supply Company (HAZECO).

The proposed framework has drawn strong objections from the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), which has warned that consumers could face payments of around Rs1.4 trillion over 12 years under an illustrative financing scenario, without any demonstrated assurance that the project would deliver sufficient reductions in electricity losses and improvements in bill recovery.

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The objections emerged as PPIB held a stakeholders’ consultative session on Tuesday, presided over by its acting Managing Director, Dr Munawar Iqbal Kamboh.

A representative of the International Finance Corporation (IFC), a member of the World Bank Group, participated online and responded to questions raised by participants.

The government has not yet taken a final decision on the technology to be used for manufacturing the AMI meters. However, participants were informed that local manufacturing would be preferred, while international companies could collaborate with domestic investors to establish manufacturing facilities.

It was also indicated during the consultation that the project would not involve dollar indexation. The cost of the meters would be recovered from single-phase consumers through electricity bills over 12 years, although the proposed payment mechanism would not link the service payments to the respective Discos’ collection performance.

Representatives of distribution companies expressed reservations over the manner in which the project had been conceived, arguing that the entities responsible for implementation had not been adequately consulted.

“National-level decisions are taken behind closed doors without taking into confidence those who have to implement such far-reaching decisions,” a representative of Hyderabad Electric Supply Company (HESCO) reportedly observed.

Cybersecurity was another concern raised during the session. One participant stressed that the technology should be developed locally to minimise the risk of security breaches and protect the electricity distribution system from potential external interference.

The IFC representative said local manufacturing would be preferred and international players could participate in collaboration with domestic companies. Pakistan’s Power Information Technology Company (PITC) would also have a key role in the project, with the AMI infrastructure eventually to be handed over to the relevant Discos after completion.

The Privatisation Commission and the National Electric Power Regulatory Authority (NEPRA) have also been taken on board, participants were informed.

Questions were also raised about the effectiveness of smart metering in areas where consumers resist bill payments or resort to illegal connections, commonly known as electricity hooks. Participants were told that specific measures would be introduced to address these challenges.

A pilot project is expected to be rolled out next month, while PPIB plans to hold further consultative sessions in Karachi, Lahore and Islamabad to explain the project and respond to stakeholders’ concerns.

In its written observations submitted to PPIB on the draft Framework Guidelines for Deployment of Advanced Metering Infrastructure through Public-Private Partnerships, 2026, dated October 13, FPCCI has called for the proposed framework to be held in abeyance until an independent cost-benefit analysis is prepared, published and subjected to regulatory and stakeholder scrutiny.

The Federation argues that the proposed fixed monthly service payment for installed and communicating meters, for a contractual period of up to 12 years, could shift the investment and performance risks to consumers regardless of whether the expected benefits materialise.

It has cautioned that the structure could replicate the capacity-payment model associated with independent power producers (IPPs), under which consumers remain liable for substantial payments irrespective of actual performance or demand.

According to FPCCI’s illustrative calculation, an assumed cost of Rs40,000 per meter for 16.2 million meters would translate into an initial project cost of Rs648 billion.

If the amount were financed over 12 years at an assumed interest rate of 15 percent, annual payments could reach approximately Rs119.5 billion, equivalent to around Rs615 per meter per month. Total payments would amount to approximately Rs1.4 trillion over the contractual period, excluding communications, software and operating costs.

FPCCI has emphasised that these are illustrative estimates rather than a final project-cost assessment. It has demanded that the government establish, through independently verified calculations, whether reductions in losses, improved recoveries and avoided costs would exceed the total amount payable by consumers.

The Federation has also questioned the proposed foreign exchange indexation provisions in the draft guidelines. Although the service payment is denominated in rupees, the draft provides for foreign exchange indexation without a specified ceiling on the indexed component.

FPCCI has called for the service payment to remain fixed in Pakistani rupees, with currency risks borne by bidders through appropriate financing or hedging arrangements.

The Federation has further objected to the classification of service payments as pass-through, non-controllable costs recoverable in full through the relevant Disco’s tariff. It maintains that the expenditure should instead be accommodated within the distribution company’s allowed margin under the Multi-Year Tariff (MYT), subject to prudence review and financed through improved operational efficiency.

Another concern relates to the proposed confidential benchmark price, under which bids at or below the benchmark could be deemed reasonable and prudent. FPCCI argues that the benchmark and its underlying assumptions should be disclosed when financial proposals are opened and subjected to NEPRA’s public prudence review.

The Federation has also questioned the proposed payment-security arrangements, including security against the entire Master Collection Account, possible government guarantees for Disco payment obligations and federal backing for termination payments.

It has asked PPIB to clarify the priority of these payments relative to power-purchase obligations and warned that allowing a regulated return on the same metering assets could result in double recovery from consumers.

FPCCI has called for the deletion of provisions allowing a return on assets unless safeguards are introduced to prevent consumers from paying twice for the same investment.

The Federation has also warned that government guarantees and termination-payment commitments could create contingent liabilities for the federal government throughout the 12-year contractual period. It has demanded that any sovereign support be capped, properly approved and transparently priced, with the associated fiscal costs disclosed.

FPCCI maintains that distribution companies approved for privatisation should finance their own AMI investment programmes through plans reviewed by NEPRA. It argues that private owners would benefit from lower losses and should therefore bear the associated investment and performance risks.

The Federation has cautioned that payment-security arrangements could survive a change of ownership, leaving long-term financial obligations attached to the distribution companies and ultimately passing the burden to consumers.

It has also demanded explicit safeguards against transferring project costs to industrial consumers, K-Electric customers or consumers of other distribution companies who do not directly benefit from the proposed programme.

FPCCI argues that industrial consumers generally use three-phase metering equipment and should not contribute to a project focused on replacing single-phase meters in the five designated Discos. It has also noted that K-Electric falls outside the proposed framework and operates under its own investment programme and NEPRA determinations.

The Federation has further questioned the timing of the proposed guidelines in view of NEPRA’s pending proceedings concerning the prudence of distribution-sector investments, including review petitions relating to restrictions on high-cost feeders.

It maintains that introducing a parallel mechanism for recovering investment costs before the regulator concludes its proceedings could undermine the existing regulatory framework and add to the financial liabilities of the power sector.

FPCCI has consequently urged PPIB not to issue a request for proposals until an independent cost-benefit analysis and the complete project cost are published, the benchmark price is disclosed, payments are linked to verified performance, and the framework is aligned with NEPRA’s formal determinations.

The Federation has also called for the guidelines to be held in abeyance until NEPRA decides the pending review petitions and for any eventual rollout to be phased.

The consultation process is expected to continue through further sessions in Karachi, Lahore and Islamabad. The government has yet to finalise the technology and procurement arrangements, while concerns remain over the allocation of financial risks, the role of local manufacturing, cybersecurity and the extent to which the proposed investment would deliver measurable benefits to electricity consumers.

Copyright Business Recorder, 2026