The New Arithmetic of Power Purchase Price: The Real Risk Behind Rs27.309 per Unit at Nepra's Hearing

The number presented at NEPRA's hearing for the 2027 Power Purchase Price (PPP) can only be read one way: put the six scenarios CPPA-G submitted in a single column, then watch which figure still holds its place after Nepra's questions. Base case Rs27.309 per unit. Best case Rs25.883. Worst case up to Rs29.255. The gap between them is Rs3.372 per unit — a difference that changes a consumer's entire monthly billing structure per unit consumed.

I opened this hearing's data the way I open a fast bowler's spell — load column first, then spell length, then the gap the scorecard doesn't show. Here is the scorecard: total power purchase cost Rs3.552 trillion, of which fuel cost Rs1.319 trillion and capacity charges Rs1.914 trillion. And that is where the number the headlines missed sits — capacity charges are Rs14.717 per unit, a larger share than the base-case fuel component of Rs10.141 per unit.

Context: The Six-Scenario Framework and Its Conditions

CPPA-G projects 130,081 GWh of electricity sales for CY2027, assuming 2.6 percent demand growth and no load management. The projection multiplies KIBOR, SOFR, inflation, exchange rate, transmission charges and system losses together. The base case assumes Rs279 to the dollar; the worst scenario goes to Rs290.

The questions Nepra raised at the hearing were structural, not technical: RLNG supply availability, exchange rate, Brent prices, and most importantly the discrepancy between CPPA-G, ISMO and Disco demand forecasts. CPPA-G had to concede uncertainty in fuel availability, exchange rates and future fuel-charge adjustments (FCA). Nepra ordered KIBOR revised from 11.70 percent to 12 percent — meaning the projection is not yet in final form.

One point sets the direction of this debate: Rs27.309 per unit is not an approved consumer tariff. It is a projection, subject to change after Nepra's review, on top of which distribution charges, taxes, subsidies and adjustments will be added — none detailed in this report. Readers treating this figure as the final bill are reading a ledger line that has not yet been written.

Core Analysis: Capacity Charges Are the Fixed Weight Cheap Fuel Cannot Move

Look first at the scenario being called most optimistic — Rs25.883 per unit. It assumes cheaper fuel and a favourable RLNG-gas mix. But in that same scenario, capacity charges sit at Rs1.914 trillion. The benefit from falling fuel prices has a ceiling, because the largest share of total cost is tied not to volume generated but to capacity available. Under IPP contracts this payment is due even when less electricity is generated than capacity exists.

Here a second arithmetic begins, and it is the least-discussed risk of this hearing: if electricity sales fall below the 130,081 GWh projection, the fixed capacity charge spreads across fewer units and the per-unit cost rises on its own. CPPA-G's base case assumes 2.6 percent demand growth, while the demand-sensitivity scenario assumes only 0.70 percent. The gap between these two estimates shows how uncertain the department itself is about demand. And Nepra recorded that CPPA-G, ISMO and the Discos each submitted different demand forecasts. When three documents cannot agree on one number, a tariff built on that number is a compromise, not a forecast.

The Fuel Charges Adjustment (FCA) mechanism is the channel that carries this uncertainty to the consumer. Industrial representatives warned at the hearing that FCA could rise two to three times during winter. I record this the way I record inconsistency in a bowler's season workload: the base-case number looks clean, but beneath it an FCA rhythm is running separately, and in the electricity bill the consumer feels that rhythm, not the base case.

| Scenario | PPP (Rs/unit) | Key condition | |---|---|---| | Optimistic | 25.883 | Cheaper fuel, favourable RLNG-gas mix | | Base case | 27.309 | 2.6% demand growth, dollar at 279 | | Adverse | 28.835–29.255 | Higher exchange rate (Rs290/dollar), higher fuel costs, revised financial assumptions |

This table is a warning in itself, but the right way to read it is not that the worst figure is most likely. The right way is to look at the Rs3.372 gap between best and worst and ask: how much of that gap comes from things Pakistan can control? The answer is clear — very little. Exchange rate, Brent, RLNG spot prices, and capacity payment contracts — none of these are decided in Nepra's chamber. Nepra can only decide with which assumption to accept these external variables.

Contrarian Angle: Where the Commentary Was Right, and Where the Ledger Is Incomplete

I want to record where the main thread of the debate points in the right direction. Industrial representative Aamir Sheikh's demand — that the incremental package be suspended immediately and FCAs applied prospectively — is technically rational. When planning production costs, industry needs structure, not estimates. His claim that the package benefits only a few select industries while more than 90 percent of consumers bear the burden is a solid distributional argument about cross-subsidy, and cannot be dismissed.

But here the ledger's limit must show. This claim tells us who benefits, not the size of that benefit. The report lists no beneficiary industries, no per-industry cross-subsidy amount, and no estimate of what removing the package would do to overall PPP. Until these three figures are public, this is a debate about distribution, not cost — and in a distribution debate, no side states the limits of its own number.

On the other side, the headlines emphasised a roughly 8 percent increase. For me that number is the weakest part of this story. The real story is not 8 percent but the Rs1.914 trillion fixed component present in every scenario, and the demand forecast three different institutions see differently. 8 percent is a gap; capacity charges are a structure. Structures last longer.

One line of human cost must be recorded, without drama: for the consumer whose bill will be revised twice next summer due to FCA, the difference between 27.309 and 25.883 matters less than when and by how much the revision comes. The burden of forecast uncertainty ultimately falls on household and factory ledgers.

Takeaway: What to Watch at the Next Hearing

In Nepra's next order I will watch three things, all more important than this single figure.

First — reconciliation of demand forecasts. Is the 130,081 GWh figure from CPPA-G, ISMO and the Discos derived from one model, or an average of three? If it is an average, the entire per-unit capacity cost calculation reopens. Second — the effect of the KIBOR revision. How much the change from 11.70 to 12 percent alone moves PPP should be shown explicitly in the order; if not, the scenario table remains a documentary exercise. Third — the fate of the incremental package. If suspended, who bears the cross-subsidy burden, and will it show up in the next FCA?

Until those three answers arrive, 27.309 is what every projection is — an estimate that has not yet put on the costume of a final figure. And the real question pending in Nepra's chamber is not whether electricity will get more expensive; it is how much of that increase stays transparent before the consumer and how much hides in the FCA rhythm no headline prints.