The Tariff Trajectory in Karachi: CPPA-G's Rs27.309/Unit Proposal and the Three Questions Before Nepra

At NEPRA's Karachi office on Wednesday, one number kept returning to the screen: 27.309. The Central Power Purchasing Agency-Guaranteed (CPPA-G) tabled that figure as the average Power Purchase Price (PPP) for CY2027—rupees per kilowatt-hour—and in that moment the hearing's real subject stopped being the number and became the assumptions it stands on. The base case bundles 2.6 per cent demand growth, 130,081 GWh of sales, a rupee-dollar rate of 279, steady Brent, and zero load management. Across six scenarios the range runs from 25.883 to 29.255 rupees per unit—a spread of 3.372 rupees, roughly 12 per cent wider than the proposal itself.

Any tariff ledger splits into three permanent blocks: fuel cost, capacity charges, and the distribution-system load. Total power purchase cost for the base year is put at Rs3.552 trillion, of which fuel is Rs1.319 trillion and capacity charges Rs1.914 trillion. In per-unit language: fuel at Rs10.141 and capacity at Rs14.717. The implication is plain—even in the base case the heaviest line is not fuel but the payment for available generation capacity. In my notebook I usually log the length of a spell first; here the first entry is that capacity charges sit Rs4.576 per unit above fuel charges.

Which is why looking at the optimistic scenario (Rs25.883) and assuming cheaper fuel will pull the tariff down is arithmetically incomplete. Even in the ideal case capacity charges hold at Rs1.914 trillion—they do not fall, only fuel does. NEPRA ordered KIBOR revised from 11.70 to 12 per cent, showing that financing cost is a living part of the tariff, not fixed background. The two exchange-rate ends—279 and 290—sit in the same table, and that gap is where most of the volatility lives.

My central note is that this hearing is not really about the tariff; it is a hearing about demand. The divergence between CPPA-G, ISMO and the Discos' demand forecasts is not a technical footnote—it is the foundation of the tariff arithmetic. If sales fall below 130,081 GWh, the fixed capacity charge is spread over fewer units at the same total, and per-unit cost rises by itself. Put differently, lower demand does not lead to a cheaper tariff; it leads to a more expensive per-unit rate. The 0.70 per cent growth option in the scenario table points straight at that trap.

This rigidity in capacity charges is the real reason for industrial opposition, not merely the 8 per cent increase. At the hearing, industry representatives demanded immediate suspension of the incremental package and prospective application of FCA (Fuel Charges Adjustment), arguing the package benefits a limited set of industries while more than 90 per cent of consumers carry the burden. That is a direct political-economic question of cross-subsidy. Until the ledger of beneficiaries and payers is made public, the opposition will persist—and the opposition will feed back into demand, which in turn affects per-unit cost. It is a closed loop NEPRA has to break.

One thing must be admitted here that sits outside my model: I cannot forecast the actual availability of fuel supply. RLNG availability, spot-market behaviour, and the possible two-to-threefold winter jump in FCA—these are variables for which no reliable public data exists right now. CPPA-G itself acknowledged uncertainty in fuel availability and exchange rates. So I file one firm call: NEPRA will not accept the base case unchanged in its final order—with 80 per cent confidence it will attach a condition requiring the demand forecast to be reconciled and clarity on capacity charges. That call is about process, not the number; the number only gets fixed after the final order.

Those treating the 8 per cent rise as final are reading a proposal as a decision. The tariff effective from January 1, 2027 is still on NEPRA's table, and the heaviest file on that table is capacity charges—Rs1.914 trillion, present in every scenario. Next time a story about the electricity bill appears, ask the first question: how much did fuel get cheaper, or how much did capacity charges fall? The answer will usually be hiding in the second question.