Pakistan’s sole power purchaser proposes slight reduction in power tariffs for FY26

The Central Power Purchasing Agency (CPPA) has Wednesday submitted its projected power purchase price for fiscal year 2026, outlining seven different scenarios for consideration by the National Electric Power Regulatory Authority (NEPRA).

The scenarios estimate a power purchase price ranging between PKR 24.75 and PKR 26.70 per kWh, marking a slight decrease from the current rate of PKR 27 per kWh. These projections incorporate variables such as demand growth, exchange rates, inflation trends, and hydrology conditions.

The projections aim to determine electricity costs based on various economic, hydrological, and fuel price factors.

NEPRA has invited stakeholders, including consumers and industry representatives, to submit their comments ahead of a hearing on the matter. The session will take place in-person at NEPRA Tower in Islamabad, as well as virtually via Zoom.

The demand forecast for distribution companies (DISCOs) has been developed using macroeconomic projections and historical electricity consumption trends.

Based on GDP projections from the International Monetary Fund (IMF) and historical elasticity estimates, economic growth is expected to drive an increase in electricity demand of 2.8% to 5%.

The CPPA's report details the sensitivity analysis behind the seven scenarios, factoring in demand, hydrology, fuel prices, and exchange rates. It also provides a breakdown of the country's projected energy mix.

Across the analyzed cases, indigenous fuels are expected to account for 55% to 58% of total energy generation, while clean fuels—such as renewables—are projected to contribute between 52% and 56%.

Fuel prices remain a key driver of the overall power purchase cost. To ensure accuracy, the forecast relies on market data from Argus Media and Plans for imported fuels, while local fuel price estimates are informed by OGRA, NEPRA, and the Tariff Coordination and Evaluation Board (TCEB).

Additional service charges and National Transmission & Despatch Company (NTDC) losses have been estimated at 2.8%, further affecting the final projected costs.

The hearing will provide an opportunity for public and industry input, potentially influencing the regulatory body's decision on finalizing power purchase rates for the upcoming fiscal year.