ISLAMABAD: Pakistan’s power purchase price (PPP) is projected to reach Rs27.309 per kilowatt-hour (kWh) in calendar year 2027, with the Central Power Purchasing Agency-Guarantee Limited (CPPA-G) estimating total electricity procurement costs of Rs3.55 trillion under its base-case scenario.
Thank you for reading this post, don't forget to subscribe!The projections have been prepared for the rebasing of consumer-end electricity tariffs for ex-Wapda distribution companies (XWDISCOs), scheduled to take effect from January 1, 2027. The revised reference costs will help determine the applicable electricity tariff framework for the new period.
According to CPPA-G’s estimates, the power purchase price could range from Rs25.883 per unit under the ideal scenario to Rs29.255 per unit under the second-worst-case scenario, depending on fuel costs, exchange-rate movements, electricity demand and capacity payments.
The National Electric Power Regulatory Authority (Nepra) has scheduled a public hearing on the projections for November 3, 2026, at 2pm at Nepra Tower, with online participation available through Zoom. Stakeholders have been invited to submit their comments and objections.
Under the base-case scenario, CPPA-G has assumed annual electricity demand growth of 2.60%, an exchange rate of Rs279 per US dollar and electricity sales of 130,081 gigawatt-hours (GWh) to distribution companies.
Capacity charges constitute the largest component of the projected procurement cost, estimated at Rs1.91 trillion, equivalent to Rs14.717 per unit. Fuel costs are projected at Rs1.32 trillion, or Rs10.141 per unit, while variable operations and maintenance expenses are estimated at Rs70.58 billion, equivalent to Rs0.543 per unit.
Transmission-related costs and Ministry of Finance charges are projected at a combined Rs248.30 billion, translating into Rs1.909 per unit. The estimates highlight the continued significance of capacity payments in electricity procurement costs, alongside fuel expenses and exchange-rate fluctuations.
In the two worst-case scenarios, the rupee is assumed to depreciate to Rs290 against the US dollar. Under these assumptions, the projected power purchase price rises to Rs28.835 per unit in Worst Case-I and Rs29.255 per unit in Worst Case-II.
A demand-sensitivity scenario assumes annual electricity demand growth of just 0.70%, reducing projected sales to 127,937 GWh. Under this scenario, the power purchase price is estimated at Rs27.568 per unit, reflecting the impact of lower sales volumes and revised capacity-cost assumptions.
Meanwhile, a scenario examining the mix of re-gasified liquefied natural gas (RLNG) and gas projects the purchase price at Rs26.441 per unit. The ideal scenario estimates the price at Rs25.883 per unit, primarily due to lower fuel expenses.
Across all six scenarios, the financial and operational assumptions include a Karachi Interbank Offered Rate (KIBOR) of 11.70%, a Secured Overnight Financing Rate (SOFR) of 3.98%, US inflation of 2.10%, domestic inflation of 8.20% and National Grid Company (NGC) losses of 2.50%.
The projections will undergo regulatory scrutiny as part of the tariff rebasing process. The estimated power purchase price should not be confused with the final retail electricity tariff, which will depend on Nepra’s determinations and the applicable taxes, duties, subsidies and other tariff components.
The November 3 hearing will provide stakeholders an opportunity to present their views on the assumptions and cost estimates that will inform the revised consumer-end electricity tariff framework from January 2027.
Story by Khalid Mustafa
