Unreliable data & recovery figures: NEPRA grills CPPA-G and PPMC

ISLAMABAD: The National Electric Power Regulatory Authority (NEPRA) on Thursday grilled CPPA-G and PPMC for allegedly presenting unreliable power-sector data and the proposed recovery of Rs32.7 billion from electricity consumers through a positive Fuel Charges Adjustment (FCA) of Rs2.5624 per unit for September 2026, was questioned by industrial consumers for using expensive fuels despite the availability of cheaper generation sources.

During a public hearing on the Central Power Purchasing Agency-Guarantee’s (CPPA-G) request for the September FCA, industry representatives challenged the increased reliance on diesel, high-speed furnace oil (HFO) and re-gasified liquefied natural gas (RLNG), while demanding an explanation for the underutilisation of several coal-fired power plants.

The proposed adjustment, if approved, would replace the existing positive adjustment of Rs1.11 per unit, increasing the adjustment by approximately Rs1.45 per unit. The additional Rs32.7 billion would be recovered from consumers through their November electricity bills.

The hearing also raised questions about a proposed quarterly tariff adjustment (QTA) of approximately Rs22 billion, equivalent to around Rs1.30 per unit, for the next quarter. Industry representatives expressed concern that a positive QTA would increase electricity costs during the winter months, when consumers could also face higher monthly FCAs.

The hearing was presided over by NEPRA Chairman Waseem Mukhtar through an audio link, while Member (Tariff and Finance) Amina Ahmed, Member (Development) Maqsood Anwar Khan and Member (Law) Ghulamullah Shaikh attended physically.

CPPA-G Chief Executive Officer Rihan Akhtar, Power Planning and Monitoring Company (PPMC) Chief Financial Officer Naveed Qaiser and representatives of the Independent System and Market Operator (ISMO) briefed the regulator on generation costs, fuel consumption and factors contributing to the proposed adjustment.

A major concern raised during the proceedings was the reliability and consistency of information submitted by power-sector entities. NEPRA’s Senior Adviser (Monitoring and Enforcement) questioned the authenticity of data provided by PPMC and ISMO, observing that the figures submitted to the regulator differed from those presented during public hearings.

Member (Tariff and Finance) Amina Ahmed endorsed the concern, indicating that the Authority was aware of discrepancies but did not want to turn public hearings into a “circus” by taking up every inconsistency during the proceedings.

The issue assumed particular significance because the fuel-cost calculations and other adjustments ultimately determine the amounts recovered from electricity consumers.

Industrial consumers questioned why expensive fuels accounted for a substantial portion of electricity generation in September despite the availability of other generation sources.

According to figures cited by an industrial representative, diesel-based generation accounted for Rs13.262 billion out of a total generation cost of Rs123.618 billion, while HFO and RLNG also represented substantial shares of the generation bill.

The industrial representative said diesel accounted for approximately 11 per cent of the total value of energy generated, while HFO represented around 9.5 per cent and RLNG approximately 26 per cent.

He argued that these fuels were considerably more expensive than other available generation sources, with their costs ranging from approximately Rs40 to Rs62 per unit, depending on the fuel and generation source.

Against this backdrop, the industry questioned why 768 million units were reportedly sold to certain consumers at a delivered price of around Rs23 per unit, arguing that the resulting difference placed a disproportionate burden on other electricity consumers.

“This is a huge amount. These fuels cost in the range of Rs40 to Rs62 per unit, yet incremental units are still being sold at Rs23 per unit delivered. This must be stopped as we are tired of paying such a high cross-subsidy to a few large lucky consumers,” an industrialist said.

The industry maintained that the government and regulator should examine whether the costs associated with expensive generation were being passed on to the wider consumer base while selected industrial consumers benefited from preferential incremental consumption arrangements.

Industrial consumers also questioned why diesel generation increased substantially in September when geopolitical tensions and the disruption in international energy markets had begun months earlier.

They argued that the industry needed a detailed explanation of the factors that led to the higher consumption of diesel during September, particularly when RLNG generation was reportedly lower than the available allocation.

The industry also questioned why several relatively cheaper coal-fired power plants, including those operated by China Power Hub Generation Company (CPHGC), Port Qasim Electric Power Company (PQEPC), Lucky Electric and Engro Powergen, were reportedly operating at less than 60 per cent utilisation.

According to industrial representatives, NEPRA should disclose the extent to which the September FCA was affected by transmission constraints between the northern and southern parts of the country, as opposed to a genuine shortage of cheaper fuels.

They argued that without a plant-wise breakdown of generation, fuel availability, dispatch constraints and costs, consumers could not determine whether the increase in the FCA resulted from international fuel prices, inefficient dispatch decisions or limitations in the transmission network.

The industry demanded that the regulator establish how much additional cost was incurred because cheaper power plants were not utilised to their full available capacity.

Industrial consumers once again called on the government to use levies collected on diesel and HFO consumed for electricity generation to reduce power tariffs.

They argued that substantial government levies on these fuels contributed to the overall cost of electricity and that a portion of the revenue collected from fuel used in power generation should be returned to consumers through tariff relief.

The industry recalled that the current prime minister had previously taken steps to use fuel-related levy proceeds to reduce electricity costs and urged the government to consider a similar mechanism.

According to industrial representatives, consumers were effectively bearing additional costs through electricity bills while a significant portion of the money was being transferred to the government through fuel levies.

They also drew a parallel with income tax liabilities of power distribution companies, which they said were passed on to consumers irrespective of whether the companies generated profits or incurred losses.

The industry maintained that the government should examine the combined impact of fuel levies, taxes and other charges when determining the actual cost of electricity and designing relief measures.

Another issue raised by industrial consumers was the absence of a tariff adjustment reflecting reductions in capacity-related charges negotiated with RLNG terminal operators.

The industry said it was still awaiting the adjustment arising from the revised arrangements with terminal owners and maintained that the resulting savings should be credited to consumers through a reduction in the FCA or another appropriate tariff adjustment.

Industrial representatives argued that any reduction in capacity charges should be transparently reflected in the power-sector cost calculations rather than remaining outside the immediate relief available to consumers.

They urged NEPRA and the relevant government agencies to disclose the financial impact of the revised terminal arrangements and explain when the savings would be passed on to electricity consumers.

The industry also expressed concern over the inclusion of more than Rs16 billion under the Prior Year Adjustment (PYA), which formed a substantial component of the overall amount being sought from consumers.

Representatives questioned how such a large amount could be incorporated into the proposed recovery through a single line item described as previous actualisation, arguing that it required a detailed explanation and independent scrutiny.

They further maintained that adjustments relating to previous periods should not be added to current consumer bills without a clear reconciliation of the underlying amounts, the period to which they related and the reasons for any earlier under- or over-recovery.

The concern was particularly significant because the proposed September FCA would recover approximately Rs32.7 billion from consumers, with the PYA component accounting for more than Rs16 billion, according to the industry’s account of the hearing.

The industry urged NEPRA to distinguish between genuine fuel-cost variations for September and adjustments relating to previous periods so that consumers could understand the basis of the proposed increase.

Industrial representatives also rejected the assertion by CPPA-G CEO Rihan Akhtar that previous reductions in industrial electricity tariffs had not translated into a corresponding improvement in exports.

They argued that Pakistan’s exports had reached record levels when industrial electricity tariffs were reduced to around seven to nine US cents per unit, maintaining that lower energy costs were essential to improving the competitiveness of export-oriented sectors.

Industry representatives said Pakistan was currently facing electricity tariffs higher than those prevailing in competing export countries, placing domestic manufacturers at a disadvantage in international markets. And maintained that lower electricity prices could improve production economics, support capacity utilisation and enable exporters to compete more effectively on price.

Industrial representatives maintained that any assessment of the relationship between electricity tariffs and exports should take into account international demand, exchange-rate movements, access to finance, taxation and other production costs rather than dismissing the importance of energy prices.

They called for a comprehensive industrial electricity package that would help restore competitiveness and encourage greater utilisation of available generation capacity.

Meanwhile, PPMC CFO Naveed Qaiser said the government had reduced power-sector circular debt from Rs2.3 trillion to Rs1.6 trillion through various measures.

He urged the business community, particularly representatives such as RehanJaved and Aamir Sheikh, to raise their voices against fuel levies, arguing that lower taxation could help reduce electricity tariffs.

Qaiser said the government was working to bring industrial electricity tariffs closer to levels prevailing in regional countries and that discussions were under way at different forums. He added that domestic and industrial tariffs had been reduced by Rs10 and Rs18 per unit, respectively.

However, CPPA-G’s chief executive maintained that previous reductions in industrial tariffs had not resulted in a corresponding improvement in exports.

Responding to a question about the next QTA, Qaiser indicated that the adjustment could amount to approximately Rs22 billion, or around Rs1.30 per unit.

The proposed QTA prompted further concern among industrial consumers, who questioned how the adjustment had increased after an earlier negative QTA had reportedly been communicated to the industry for July.

They argued that electricity consumption had exceeded reference levels during July, August and September, and sought an explanation for the apparent increase in the quarterly adjustment despite higher consumption.

The industry warned that an additional positive QTA could further increase electricity bills during the winter months, particularly if accompanied by higher monthly FCAs.

Representing the Karachi Chamber of Commerce and Industry, Tanveer Barry described the September FCA as a serious threat to industrial competitiveness.

He argued that Pakistan was paying approximately Rs1.9 trillion in capacity charges, equivalent to $6-7 billion annually, while continuing to seek financial assistance from the International Monetary Fund.

Barry maintained that better utilisation of lower-cost power plants could reduce the cost of electricity supplied to industrial consumers and help strengthen exports.

He proposed dedicating relatively cheaper power plants in Sindh and Karachi to industrial consumers in the port city, which he said accounted for 54 per cent of the country’s exports.

Barry also highlighted the impact of solar generation on daytime demand from the national grid and proposed a special industrial electricity package to encourage consumption during daylight hours.

He argued that improved utilisation of available generation capacity, a review of fuel taxes and more competitive industrial tariffs were essential to reducing the cost of doing business.

A representative of the Federation of Pakistan Chambers of Commerce and Industry, RehanJaved, separately questioned the credibility of CPPA-G’s figures and urged NEPRA to reject the proposed FCA. He also raised concerns over the industrial incremental consumption package, coal procurement arrangements for the Port Qasim power plant and what he described as excessive taxation.

Javed cited figures suggesting that Rs2.711 trillion had been lost during FY2015-16 to FY2025-26, comprising Rs1.355 trillion attributed to inefficiencies and Rs1.3556 trillion to under-recoveries. These figures were presented by the industry representative during the hearing and were not independently verified during the proceedings.

Responding to concerns about coal procurement, CPPA-G CEO Rihan Akhtar rejected the impression that the agency was allowing coal to be purchased at inflated prices and passing the additional costs on to electricity consumers.

Arif Bilvani raised questions about underutilization of different power plants which produce electricity at cheaper rates as compared to those operated in September 2026.

Copyright Business Recorder, 2026