Daily Times

Electricity consumers are set to pay capacity payments amounting to Rs2.8 trillion during the upcoming financial year 2024-25. These payments account for 70% of the electricity tariff for consumers, with the remaining 30% attributed to energy costs.

These capacity payments are linked to dollar indexation, which has increased due to the rupee’s depreciation against the dollar over the past year. Alarmingly, even power plants that made investments in rupees in Pakistan are receiving capacity payments in dollars. For the current financial year, capacity payments have been estimated at Rs2.1 trillion.

Capacity payments are made to power plants that remain idle, receiving payments without generating a single unit of electricity due to faulty agreements. At a public hearing held by the National Electric Power Regulatory Authority (NEPRA) on Thursday, the Central Power Purchasing Agency (CPPA-G) presented different scenarios of electricity rates for the upcoming financial year, indicating an expected hike of Rs5 per unit, which would burden consumers with Rs310 billion. During the presentation, it was disclosed that the energy purchase price (EPP) amounted to Rs1.3 trillion, and capacity payments stood at Rs2.146 trillion for the next financial year. CPPA-G officials informed NEPRA that capacity payments could vary between Rs2.1 trillion and Rs2.8 trillion.

Regarding demand projection, power ministry officials noted that a GDP growth target of 3.5% was considered, aligning with the IMF projection.