NEPRA Revises Tariff Mechanism to Protect National Interest and Reduce Power Sector Costs
NEPRA Revises Tariff Mechanism to Protect National Interest and Reduce Power Sector Costs
Islamabad, April 24, 2025 – The National Electric Power Regulatory Authority (NEPRA) held a public hearing today at its headquarters in Islamabad under the chairmanship of Mr. Waseem Mukhtar. The hearing addressed tariff adjustments pertaining to Haveli Bahadur Shah, Balloki, NPGCL, and CPGCL power plants.
In a landmark move, NEPRA has decided to discontinue dollar-based indexations for these plants, transitioning instead to rupee-based indexations fixed for the entire useful life of the power projects. This strategic revision aims to curb foreign exchange exposure and reduce tariff volatility for consumers.
Further reforms include capping the indexation for Operations & Maintenance (O&M) costs to 70% of rupee devaluation, down from the previous 100%. Local O&M expenses will now be indexed to either 5% or the 12-month average of the National Consumer Price Index (NCPI), whichever is lower.
Additionally, the return on equity (ROE) structure has been rationalized. Plants will now receive 35% of the ROE as fixed, with the remaining 65% linked directly to the actual operation of the plant — a significant departure from the previous 100% guaranteed ROE model.
These prudent measures will result in a projected saving of Rs. 1.6 trillion over the life of the projects, including Rs. 22 billion in the current financial year alone.
The hearing, attended by sector professionals and members of the public, was met with wide appreciation. Citizens commended the Authority’s commitment to fiscal responsibility and its proactive role in ensuring a sustainable and consumer-friendly power sector. NEPRA remains steadfast in its mission to implement reforms that ensure transparency, efficiency, and affordability in the power sector.
