Pakistan Proposes Rs27.309 per Unit Power Purchase Price for 2027 as Nepra Reviews Key Assumptions

This report concerns Pakistan’s electricity-sector regulation, not cricket. The National Electric Power Regulatory Authority (Nepra) is reviewing a presentation by the Central Power Purchasing Agency-Guarantee (CPPA-G) containing six scenarios for the 2027 Power Purchase Price (PPP). Under the base case, the average PPP is projected at Rs27.309 per kilowatt-hour. The figure remains a proposal, not a final consumer tariff.

Hook: the real story is the range of uncertainty

Public discussion has focused on a possible increase of about 8 percent. The six scenarios show why that headline is incomplete. Under the ideal case, PPP could fall to Rs25.883 per unit. Under adverse conditions, it could rise to between Rs28.835 and Rs29.255 per unit. Fuel prices, the RLNG and gas mix, the rupee-dollar exchange rate, electricity demand and capacity payments create this range.

Nepra has sought clarification on several assumptions and instructed CPPA-G to revise its KIBOR assumption from 11.70 percent to 12 percent. The final outcome will depend on the regulator’s decision, not simply on CPPA-G’s initial projection.

Context: how the 2027 projection was built

CPPA-G has projected electricity sales of 130,081 GWh in 2027. The base case assumes demand growth of 2.6 percent and no load-management impact. The model also includes fuel availability, international prices, exchange rates, financing costs, transmission charges and system losses.

The base case places total power purchase costs at Rs3.552 trillion. Fuel costs account for Rs1.319 trillion, while capacity charges are estimated at Rs1.914 trillion. On a per-unit basis, capacity charges contribute Rs14.717, exceeding the fuel-cost component of Rs10.141 per unit.

That structure matters. Lower fuel prices can provide relief, but capacity payments linked to available generation capacity remain a major cost. Even in the ideal scenario, capacity payments remain at Rs1.914 trillion. Cheaper fuel therefore cannot automatically produce an equivalent fall in the final power purchase price.

Nepra has also questioned differences between demand projections submitted by CPPA-G, the Independent System and Market Operator (ISMO) and distribution companies. If actual sales fall below 130,081 GWh, fixed capacity costs will be spread over fewer units, potentially increasing the per-unit cost.

Core analysis: capacity charges have become the central pressure point

The clearest insight from the proposal is that capacity charges are larger than the fuel-cost component in the base case. At Rs14.717 per unit, capacity charges exceed fuel costs of Rs10.141 per unit. This means Pakistan’s electricity-cost problem cannot be explained by expensive oil, gas or RLNG alone. The relationship between contracted capacity, actual utilisation and fixed payments is equally important.

The downside from cheaper fuel will remain limited unless fixed system costs and capacity utilisation are addressed. By contrast, a weaker rupee, higher fuel prices and supply uncertainty could push PPP toward Rs29.255 per unit. Some scenarios use an exchange-rate assumption of Rs279 per dollar, while the adverse case moves toward Rs290. Imported fuel and foreign-currency obligations make the projection vulnerable to currency depreciation.

CPPA-G has acknowledged uncertainty regarding fuel availability, exchange rates and future fuel-charge adjustments. That acknowledgement confirms that Rs27.309 is a model outcome based on assumptions rather than a guaranteed future price.

Demand is another crucial variable. The base scenario assumes 2.6 percent growth, while a demand-sensitivity scenario assumes only 0.70 percent growth. If industrial activity weakens, consumers reduce usage or businesses shift to alternative energy, grid sales may fall. Lower sales combined with largely fixed capacity payments can raise the cost allocated to each unit.

Nepra’s hearing is therefore more than a procedural step. The regulator has asked about RLNG supply, Brent prices, exchange rates, demand and financial assumptions. The KIBOR revision shows that the financial model remains open to adjustment. Each revision could alter the projected PPP.

Impact on consumers and industry

Industrial representatives have opposed the proposed arrangement, arguing that a limited number of industries may benefit while more than 90 percent of consumers could bear the cost. This is fundamentally a distributional and cross-subsidy dispute. An average PPP figure does not reveal how the cost is divided among households, industries and other consumer groups.

Consumers are also concerned about future Fuel Charges Adjustments. Industrial representatives have warned that FCA increases could rise two to three times during winter. The supplied material does not independently verify that claim, but it highlights the importance of predictability. Businesses need to know not only the level of electricity prices but also how sharply those prices can change after the billing period.

The proposed PPP should not be confused with the final household bill. Distribution charges, taxes, subsidies and other adjustments may also apply. The available information concerns the cost of purchased electricity, not the complete consumer tariff.

Aamir Sheikh has called for immediate suspension of the incremental package and for FCAs to be applied prospectively. The demand reflects a wider concern: industrial users want a pricing framework that allows them to plan production costs without repeated retrospective adjustments.

Contrarian angle: cheaper fuel alone will not solve the problem

The easy interpretation is that cheaper fuel will automatically make electricity cheaper. The scenario data points elsewhere. The large share of capacity payments means that lower RLNG or crude prices may provide only limited relief to consumers.

The policy debate must therefore include IPP contracts, capacity payments, plant utilisation and actual demand. If the system continues paying for available capacity while demand remains weak, fixed charges will continue to shape the tariff.

A second assumption deserves scrutiny: a higher tariff does not guarantee proportionally higher sector revenue. Households and industries may cut consumption, move to alternative sources or reduce production. Lower sales can spread fixed costs over fewer units and weaken the demand forecast used for future tariff calculations.

The difference between CPPA-G, ISMO and distribution-company demand estimates makes data quality especially important. Nepra will need to explain why one forecast is accepted, how seasonal demand is treated and what happens to per-unit costs if actual sales remain below the base case.

Takeaway: what to track before January 1, 2027

The Rs27.309 figure should be treated as a base-case proposal until Nepra issues its final determination. The key signals are the regulator’s order, the rupee-dollar exchange rate, RLNG and crude prices, actual electricity sales, capacity payments and the future of the incremental industrial package.

If the rupee moves beyond the assumed range of Rs279 to Rs290 per dollar, fuel and financing costs could change. If demand growth remains closer to 0.70 percent than 2.6 percent, fixed capacity charges could place greater pressure on the per-unit price. If capacity payments remain near Rs1.914 trillion, cheaper fuel will have limited effect.

Nepra’s decision will determine the immediate 2027 outlook. The longer question is whether the regulator only sets a price or also addresses the cost structure that links capacity payments, uncertain demand forecasts and fuel-market exposure to consumer bills.