Official data has revealed a concerning trend in Pakistan's power sector, showing that fixed capacity payments to power producers are set to consume an even larger portion of the electricity bill, despite government assurances of successful renegotiations.
Rising Burden of Capacity Payments
The National Electric Power Regulatory Authority (NEPRA) has approved estimated capacity charges at Rs 17.19 per unit in the power purchase price for the calendar year 2026. This marks a significant increase of 5.33 percent compared to the Rs 16.32 per unit projected for the first half of the fiscal year 2025-26 (July to December).
This increase pushes the share of capacity payments in the total projected power purchase price from 63 percent in the first half of the current fiscal year to a staggering 68 percent in the base tariff starting January 2026. Consequently, the share of actual energy (fuel) cost will shrink to just 32 percent.
Detailed Breakdown of Power Costs
According to the official documents, the total Power Purchase Price (PPP) for CY 2026 is estimated at Rs 3,185.97 billion. This colossal sum is broken down into several components:
- Rs 973.58 billion for fuel.
- Rs 49.075 billion for variable operation and maintenance costs.
- Rs 2,163.316 billion for Capacity and Use of System Charges.
The fixed cost, which includes capacity and system charges, translates to a rate of Rs 6,543 per kilowatt per month, based on a projected average monthly demand of 27,553 MW. The National Average Power Purchase Price (NAPPP) is calculated at Rs 25.32 per unit, with the energy portion alone costing Rs 8.13 per unit.
Comparison with Previous Fiscal Year
The data provides a stark contrast with the immediately preceding period. For the fiscal year 2025-26, the total power purchase price for ex-WAPDA distribution companies (XWDISCOs), excluding K-Electric's share, was Rs 3,066.153 billion.
In that period, capacity charges stood at approximately 63 percent of the total PPP, with energy costs at 37 percent. The capacity charges translated to Rs 6,484/kW/month and Rs 16.32 per unit on a purchased unit basis. The national average power purchase price for FY 2025-26 was Rs 25.98 per unit.
The approved costs are transferred to the distribution companies (DISCOs) as per the prescribed mechanism, ultimately impacting the end-consumer tariff. This rising trend in fixed capacity payments, which are owed to power producers regardless of how much electricity is actually generated or consumed, continues to be a major driver of high electricity prices in the country, challenging the government's narrative of cost containment through renegotiated agreements with Independent Power Producers (IPPs).
