Fixed Charges in Electricity Bills Used to Finance Rs. 2 Trillion Capacity Charges: NEPRA

The National Electric Power Regulatory Authority (NEPRA) has clarified that the imposition of fixed charges on electricity bills is for financing the Rs. 2 trillion capacity payments. This was revealed during a meeting of the National Assembly Standing Committee on Energy (Power Division) today. During the meeting, Energy Minister Awais Leghari disclosed that 75 percent of the total cost of electricity is due to capacity charges. Committee member Malik Anwar Taj suggested that if such high capacity payments are inevitable, the government should procure electricity from Independent Power Producers (IPPs) and provide free electricity to the public. Leghari complained of inefficiencies in electricity distribution, particularly in Khyber Pakhtunkhwa (KP). He claimed that feeders with high theft rates were allowed to remain operational under an agreement with the Khyber Pakhtunkhwa Chief Minister. But administrative support was missing and this was putting an additional burden of Rs. 6 billion. Discussions also touched upon captive power plants (CPPs). One MNA questioned whether disconnecting CPPs would yield any financial benefit and demanded clarity on when the reduced electricity prices would benefit residential consumers. The Power Secretary briefed the committee that CPPs’ integration into the national grid remains under negotiation, with an agreement from 2021 still pending. Meanwhile, talks with the International Monetary Fund are ongoing to extend the deadline for disconnecting CPPs’ gas supply. Decisions on this matter and potential benefits to the national grid are expected by the end of January 2025, the committee was told. Leghari briefly revealed progress on other fronts, including a discount of Rs. 4 per unit for residential consumers and the conclusion of agreements with five IPPs. The minister said talks with 16 more IPPs were underway. The talks are focusing on tariff revisions and equity returns for government-owned plants.