WAPDA Wants 90% Increase in Price of Electricity Generated From Hydropower

The Water and Power Development Authority (Wapda) has requested a significant 91% increase in its revenue requirement for the current fiscal year (FY26), raising it to Rs. 365 billion from Rs. 191 billion in FY23. This proposed hike would result in an estimated 90% increase in the bulk hydropower tariff, taking it to Rs. 11.55 per unit (kilowatt hour) from the current Rs. 6.10 per unit, according to Dawn. The additional revenue demand of Rs. 174 billion for FY26 also includes financial gaps from previous years, comprising Rs. 22.35 billion for FY23, Rs. 56 billion for FY24, and Rs. 61 billion for FY25. The total revenue requirement also accounts for Rs. 29.5 billion in net hydel profit (NHP) to Khyber Pakhtunkhwa at Rs. 1.55 per unit, Rs. 11.7 billion to Punjab at Rs. 1.47 per unit, and Rs. 5 billion in water use charges to Azad Jammu and Kashmir (AJK) at Rs. 1.10 per unit. The National Electric Power Regulatory Authority (Nepra) has scheduled a public hearing on September 11 to evaluate Wapda’s justification for an 85% increase in return on investments and operations and maintenance (O&M) costs, which are projected to rise to Rs. 179 billion in FY26 from Rs. 97 billion in FY23. Wapda’s proposed O&M expenses are set to increase from Rs. 24 billion in FY23 to Rs. 30.665 billion in FY24, Rs. 36.374 billion in FY25, and Rs. 39.59 billion in FY26, a cumulative 67% rise. Additionally, the authority has included depreciation charges of Rs. 7.924 billion for FY24, Rs. 8.611 billion for FY25, and Rs. 8.7 billion for FY26 in its claims. Nepra has also raised concerns over Wapda’s demand for a weighted average cost of capital (WACC)-based return on power stations, which amounts to Rs. 31.582 billion, Rs. 32.294 billion, and Rs. 32.011 billion for FY24, FY25, and FY26, respectively. Similarly, Wapda’s request for a WACC-based return on investment in power projects, Rs. 59.783 billion for FY24, Rs. 78.408 billion for FY25, and Rs. 99.642 billion for FY26, is under scrutiny. Wapda has sought a revenue requirement of Rs. 318.5 billion for FY26, marking a 166% increase compared to Rs. 119.962 billion in FY23. The authority has kept its estimates for levies and dues payable to provinces and AJK relatively stable. Annual NHP payments to Khyber Pakhtunkhwa are projected at Rs. 29.53 billion for FY26, slightly down from Rs. 30 billion in FY23. Payments to Punjab are estimated at Rs. 11.969 billion for FY26, compared to Rs. 11.867 billion in FY23, while water use charges for AJK are expected to rise to Rs. 5.085 billion in FY26 from Rs. 4.222 billion in FY23. Wapda’s total power generation from all assets is projected at 31,563 gigawatt hours (GWh) in FY26, a slight increase from 31,286 GWh in FY23. One of the key issues to be reviewed during the public hearing is Wapda’s proposal to allocate 20MW for a wheeling arrangement to Sky47 — a special purpose vehicle (SPV) of Mari Energy, for data centres of strategic and commercial use. This arrangement is part of the competitive trading bilateral contract market (CTBCM). Additionally, Wapda’s provisions for post-retirement benefits for its employees will also come under examination.