Electricity consumers in Pakistan to pay Rs8.7bn for inactive power plants

While actual cost of power generation is Rs9.25, electricity consumers are paying Rs17 per unit as upcharge for capacity charges

Business Desk - Nov 07, 2024

An undated image of a power plant. — Unsplash

While the power consumers in the country are already overburdened with 70% upcharge of their actual bill for capacity charges, the National Electric Power Regulatory Authority (Nepra) is likely to impose an additional burden of Rs8.7 billion on power consumers.

The generation of the aforesaid amount is expected to compensate the inactive Independent Power Plants (IPPs) that did not generate a single unit of electricity.

Although the government recently set the lid on contracts with some IPPs to escape capacity payments, discussions are underway with other 18 IPPs, which might take up to six months to seal a revised deal to end these payments.

While the actual cost of power generation is Rs9.25, electricity consumers are paying Rs17 per unit, amounting to 70% of their original bills as in capacity charges.

Nepra will conduct a public hearing on November 20 to decide on requests submitted by the power distribution companies (Discos) for adjustments for the first quarter of the financial year 2024-25 (July to Sept 2024), in line with the notified mechanism.

According to the Express Tribune, the Discos requested the power regulator to approve a power tariff hike, which, if approved, will oblige countrywide power consumers to bear an additional burden of Rs8.71 billion.

Requests submitted with Nepra by Faisalabad Electric Supply Company (Fesco), Gujranwala Electric Power Company (Gepco), Islamabad Electric Supply Company (Iesco), Lahore Electric Supply Company (Lesco), Multan Electric Power Company (Mepco), Peshawar Electric Supply Company (Pesco), Quetta Electric Supply Company (Qesco), Sukkur Electric Supply Company (Sepco), and Tribal Areas Electricity Supply Company (Tesco), regarding the first quarterly adjustment of the current fiscal year, will be heard on November 20.

The publication, while citing sources, reported that the Discos' proposed hike includes various charges to cover operational and maintenance costs, whose key areas are outlined in Nepra documents, including Rs8.06 billion for capacity charges to compensate power plants for maintaining availability, even when not actively generating electricity.

As per insights provided under the Nepra documents, an additional Rs1.25 billion is requested for operations and maintenance costs, crucial for infrastructure upkeep, network reliability, and overall system maintenance.