ISLAMABAD: On Wednesday, the National Electric Power Regulatory Authority (Nepra) expressed concern over ongoing negative campaigns targeting investment contracts in the power sector. Nepra cautioned that distribution companies could face significant challenges if they fail to embrace new technologies.
“You cannot forcibly revisit contracts; doing so has future repercussions and costs,” warned Amina Ahmed, Nepra’s Member for Law, during a public hearing on a proposal to add Rs2.63 per unit to consumer bills for electricity consumed in June.
Ahmed emphasized that contracts with independent power producers (IPPs) are finalized transactions. “These are closed deals,” she said. “If someone believes a contract was a mistake, it should be addressed as such initially. However, legally, these transactions cannot be reopened.”
She suggested that a thorough study is needed to reform the sector, noting that many issues in Pakistan stem from negative campaigns against contractual commitments.
Nepra advocates for technological advancements
Nepra’s Technical and Consumer Affairs Member, Rafique A. Shaikh, criticized media reports that have sensationalized contract extensions for some IPPs. He clarified that these extensions involve only energy payments on a ‘take & pay’ basis, without capacity payments or foreign exchange costs. These extensions were granted solely for technical reasons, with no adverse impact on tariffs.
Central Power Purchasing Agency (CPPA) CEO Rehan defended a small IPP criticized for extending its generation license, stating that the extension had no tariff impact and was not operational, thus under suspension.
Shaikh acknowledged that while Nepra is aware of high consumer tariffs, these are largely due to challenging macroeconomic conditions. He stressed that distribution companies (Discos) must adapt to emerging technologies and market realities, including solar power, battery storage advancements, the Competitive Trading Bilateral Contracts Market (CTBCM), and free rooftop solar installations offered by the Sindh and Balochistan governments.
Nepra’s Tariff and Financials Member, Mathar Niaz Rana, advised against signing new power contracts for 25-30 years due to the rapidly evolving electricity market.
Nepra Chairman Waseem Mukhtar urged power companies to study the trend of industries installing up to two-megawatt solar plants and relying on grid power only for backup. He also supported the proposed Rs2.63 per unit additional fuel cost adjustment (FCA) for ex-Wapda Discos, aiming to raise approximately Rs34.38 billion from consumers for electricity used in June. Originally, CPPA had requested a Rs2.10 per unit FCA, which would have added Rs27.5 billion.
