ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) has approved a revised Market Operation Fee (MOF) of Rs10.5248 per kW per month for the Central Power Purchasing Agency-Guarantee (CPPA-G) for FY2025-26, significantly lower than the Rs14.67 per kW per month sought by the power market operator.
The determination, issued on June 29, 2026, followed a detailed evaluation of CPPA-G’s tariff petition, which sought approval of its operational fee along with provisions for prior-year adjustments, miscellaneous legal expenses, and expenditure actualisation based on audited accounts.
CPPA-G had projected a total net revenue requirement of Rs4.664 billion, covering employee costs, administrative expenses, capital expenditure, taxes, and other operational adjustments. The proposed fee of Rs14.67/kW/month included various adjustments, while the base operational requirement was estimated at Rs9.08/kW/month.
After reviewing the petition, Nepra approved a lower fee of Rs10.5248/kW/month, allowing only prudent and justified expenditures while emphasizing the need to safeguard consumer interests.
A public hearing on the petition was held on December 23, 2025. In its determination, Nepra stated that no comments or objections were received from stakeholders. However, intervenors have protested the decision, claiming their submissions and viewpoints were overlooked despite having participated in the proceedings.
Employee Costs and Recruitment
A substantial portion of CPPA-G’s request related to salaries, employee benefits, and workforce expansion. The company argued that nearly 75% of its workforce comprises highly skilled professionals responsible for managing power purchase invoices exceeding Rs4 trillion, warranting competitive compensation.
Nepra approved a 10.49% increase in salaries and wages for FY2025-26—slightly below the 11% increase requested by CPPA-G—and allowed Rs1.585 billion under this head after excluding employees who had resigned or been transferred.
Employee benefits linked to salaries were approved at Rs249 million, while the regulator curtailed the proposed bonus payments, allowing only one basic salary amounting to Rs55.64 million, instead of the requested 1.5 gross salaries.
Regarding recruitment, Nepra approved Rs109.71 million to cover 26 positions already filled, while directing CPPA-G to seek approval for any future hiring through subsequent tariff petitions.
Training and Operational Expenses
CPPA-G had requested Rs32 million for employee training and capacity-building initiatives to support technical development, leadership programmes, cybersecurity, data analytics, and digital transformation.
After reviewing actual expenditure patterns, Nepra approved Rs8.58 million, citing reduced requirements following the segregation of the market operator function.
The regulator also examined consultancy, administrative, and operational expenditures, approving only those deemed reasonable and necessary.
Consumer Protection and Future Directions
Nepra reiterated that CPPA-G’s operational costs ultimately flow through to electricity consumers and therefore require rigorous scrutiny to ensure cost efficiency while maintaining effective market operations.
The authority has forwarded its determination to the federal government for notification in the official Gazette within 30 days. Should the government fail to notify the decision within the stipulated period, Nepra will issue the notification itself.
Key Directives Issued to CPPA-G
Nepra has directed CPPA-G to:
- File its next tariff petition under the Multi-Year Tariff (MYT) regime.
- Submit updated annual Power Purchase Price (PPP) forecasts reflecting changes in generation capacity, demand, exchange rates, inflation, financing costs, and the Indicative Generation Capacity Expansion Plan (IGCEP).
- Provide quarterly reports on human resource development, departmental staffing, and future recruitment plans.
- Obtain prior regulatory approval before making any additional recruitment.
- Submit the composition and profiles of its Board of Directors along with members’ roles and responsibilities.
- Continue monthly reporting on energy generation, capacity payments, fuel charges, fuel stocks, and power sector payments.
- Submit detailed reports on deviations from the Economic Merit Order (EMO), including hourly generation data, financial implications, and reasons for such deviations in coordination with NPCC.
- Provide monthly reconciliation reports on transmission and transformation (T&T) losses with the National Grid Company (NGC).
- Report all ongoing legal proceedings, including international arbitration cases and litigation involving Nepra.
- Submit monthly reports on liquidated damages (LDs) imposed on generation companies, including the reasons for such penalties.
- Obtain Nepra’s prior approval before incurring any expenditure exceeding the approved cost allocations for FY2025-26.
The regulator said these measures are aimed at strengthening transparency, improving operational efficiency, and ensuring prudent utilization of resources in Pakistan’s evolving competitive electricity market.
Story by Mushtaq Ghumman
