The National Electric Power Regulatory Authority (Nepra) has slashed the national average Power Purchase Price (PPP) by 3.77% to Rs25.98 per unit for FY2025-26, down from Rs27 per unit in the current fiscal year. The move, expected to soften electricity tariffs, sets the total power procurement cost at Rs3.342 trillion, with ex-Wapda distribution companies (XWDiscos) accounting for Rs3.066 trillion (Rs26.34/unit)—excluding K-Electric.
A staggering 63% (Rs1.941 trillion) of XWDiscos’ PPP is allocated to capacity charges, including payments to NTDC, Pak Matiari-Lahore Transmission Company, and CPPA-G. These fixed costs amount to Rs16.67 per unit, while energy (fuel) charges stand at Rs9.67 per unit. Despite the overall price cut, capacity payments remain the primary cost driver, reflecting structural inefficiencies in Pakistan’s power sector.
The Central Power Purchasing Agency (CPPA-G) had proposed seven PPP scenarios based on variables like demand growth (3–5%), exchange rates (Rs280–300/USD), and hydrological conditions. Under these models, fuel charges ranged between Rs8.16–9.19/unit, while capacity payments varied from Rs16.04–16.45/unit. The approved PPP of Rs25.98/unit suggests Nepra opted for a moderate outlook, but currency risks and demand fluctuations could still impact final costs.
Compared to FY2023-24’s PPP of Rs22.95/unit, the new rate reflects an upward trend in fixed power costs, with capacity charges rising from Rs16.22/unit last year. While the Rs1.02/unit reduction offers short-term relief, experts warn that without demand growth, efficiency improvements, or renegotiated capacity contracts, consumers may face renewed tariff hikes. The focus now shifts to whether distribution reforms and renewable energy integration can curb future price surges.