Pakistan’s 2027 Power Purchase Price Under Pressure as Nepra Reviews Six Cost Scenarios

Pakistan’s projected 2027 electricity price will not be decided by one headline figure. At a public hearing, the National Electric Power Regulatory Authority (Nepra) reviewed six scenarios submitted by the Central Power Purchasing Agency-Guarantee (CPPA-G). The base-case Power Purchase Price is projected at Rs27.309 per kWh. Under an ideal fuel and gas-mix scenario, it could fall to Rs25.883, while the worst-case range reaches Rs28.835-Rs29.255 per kWh.

The central issue is not simply the proposed 8 percent increase. It is the structure beneath that number: capacity payments, fuel prices, exchange rates and demand forecasts. Years of watching matches have taught me that a scoreboard shows the result but rarely explains the mechanics. In this case, Rs27.309 is the scoreboard; the cost assumptions are the match plan.

CPPA-G has based its projection on electricity sales of 130,081 GWh and base-case demand growth of 2.6 percent. Total power purchase costs are estimated at Rs3.552 trillion. Nepra questioned assumptions involving RLNG supply, Brent prices, exchange rates, fuel availability and demand differences among CPPA-G, the Independent System and Market Operator, and distribution companies.

Nepra also instructed that the KIBOR assumption be revised from 11.70 percent to 12 percent. That change confirms that the proposed price remains subject to regulatory adjustment before tariff rebasing begins on January 1, 2027.

The most important cost split is between fuel and capacity charges. The base case includes Rs1.319 trillion in fuel costs and Rs1.914 trillion in capacity charges. The capacity component equals Rs14.717 per unit, higher than the Rs10.141 per-unit fuel component.

The decisive risk is therefore the relationship between capacity payments and electricity sales, not fuel prices alone. Cheaper fuel can lower the fuel component, but capacity payments remain substantial even in the ideal scenario. If demand falls below the projected 130,081 GWh, fixed costs will be distributed across fewer units, potentially raising the average cost per kWh.

The demand assumptions deserve particular attention. The base case assumes 2.6 percent growth without load management, while another scenario uses only 0.70 percent growth. If high tariffs reduce industrial activity, household consumption or grid dependence, actual sales may fall below the forecast. That would create a difficult feedback loop: lower consumption could increase the per-unit burden of fixed costs.

Industrial representatives have called for the immediate suspension of the incremental package and prospective application of Fuel Charges Adjustments. They argue that the package benefits a limited industrial group while imposing costs on more than 90 percent of consumers. They have also warned that winter fuel adjustments could rise two to three times.

The distributional question is straightforward: who receives the benefit and who pays for it? The available material does not provide an independent sector-by-sector impact model, but the dispute shows why the final decision requires more than an average price. Nepra should publish the effects on households, industry and other consumer categories.

The regulator faces three major tasks. It must test the reliability of fuel, RLNG and exchange-rate assumptions; examine whether Rs1.914 trillion in capacity payments are sufficiently connected to actual utilisation; and explain that the proposed PPP is not automatically the final consumer tariff. Distribution margins, taxes, subsidies and other adjustments may alter the amount paid by consumers.

There is also a counterintuitive risk. A lower electricity demand does not necessarily produce lower bills when fixed charges remain high. Consumption can decline while the average cost per unit rises. That feedback loop should be included in the public model before the 2027 tariff decision.

The key indicators now are Nepra’s final determination, the rupee-dollar rate, RLNG and crude prices, actual electricity sales, capacity-payment disclosures and the future of the incremental package. Rs27.309 per kWh is a proposed midpoint, not an approved consumer tariff. The next important development will be whether the regulator makes the assumptions beneath that number transparent enough for consumers and industry to test.