The Power Purchase Price Scene That Shows Up in Electricity Bills, Not Scorecards

Karachi's hearing room had a screen showing Rs27.309 per unit for the CY2027 average Power Purchase Price when the CPPA-G official opened the presentation. In my notebook I wrote a single line: this is not a tariff announcement, it is an inventory of feelings. Rupees, dollars, barrels, KIBOR — all four sat in the same room, each checking the other's pockets. Nepra's chair asked questions, and with each question it became clearer that the country's electricity price story is not written on a scorecard but on the register of power-sector decisions.

This piece is an attempt to read that register.

The obvious facts first. Before Nepra — Pakistan's National Electric Power Regulatory Authority — the Central Power Purchasing Agency (CPPA-G) presented a report built on six scenarios for CY2027. The base case assumes 2.6 per cent demand growth, projected electricity sales of 130,081 Gigawatt-hours and total power purchase costs of roughly Rs3.552 trillion. All of this is the rehearsal before the tariff rebasing due on 1 January 2027 — the run-through before the consumer bill changes. And even in the rehearsal, there is more than one actor: six.

On the surface, this reads like a routine regulatory hearing. But something is buried inside that usually surfaces in headlines only as "an eight per cent increase", while the real question is left outside.

The real question is not how much the bill will rise. The real question is why the part of the bill that has nothing to do with generating electricity is the part rising. In the base case, capacity charges are Rs1.914 trillion — Rs14.717 per unit. Traditional fuel cost is Rs10.141 per unit. Note it: the cost attached to producing electricity is lower than capacity charges. Capacity charge is the payment made to an IPP (Independent Power Producer) for being available, whether or not it generates power. In plain words: we first decide the generator stays in the room, whether or not we call on it for service. And that has become the largest cost.

An old habit stops me here. For forty years I have written about what happens at the edge of the field — the groundskeeper, the net bowler, the scorer. Who is the energy sector's groundskeeper? The contracts with IPPs, where payment rests on capacity rather than output. That is the pitch on which the whole tariff game is played, and no headline has yet examined the soil.

Now the scenarios. In the best case — lower fuel cost and a favouring spot on RLNG/gas mix — PPP could fall to Rs25.883 per unit. In the worst case, the dollar goes to Rs290, fuel gets expensive, capacity charges rise, and the number reaches Rs28.835 to Rs29.255 per unit. That is a spread of roughly three and a half rupees per unit inside a single report. So wide that any "eight per cent" pill melts into it.

For me the most interesting thing is not how high the worst case is. It is that even the best case keeps capacity charges at Rs1.914 trillion. So even if oil becomes cheap tomorrow, gas prices fall, and the dollar stays kind — the part of the bill paid for standing generators does not move. Fuel may become cheap; the rent on the foundation stays the same. That is the real story of this file, and it is the line that shouts from the screen.

Nepra ordered KIBOR revised from 11.70 per cent to 12 per cent. That tweak looks small but is a very clear signal: assumptions are not yet settled. KIBOR is the benchmark interbank rate, and financing costs connect directly to electricity cost. When the regulator itself tells the model to change its interest rate, it means the report is a draft — a proposal, not an order. Nepra also sought clarification on RLNG supply, exchange rates, Brent prices and demand data, because CPPA-G, ISMO and the Discos were not aligned on their demand forecasts. This is critical information, but the headline buries it.

That demand mismatch is the biggest risk nobody notices. If economic conditions worsen, industry buys less power, or load management rises, sales will fall — instead of the base case's 2.6 per cent growth, the 0.70 per cent slow-growth scenario may arrive. Capacity charges will remain the same. And when the same fixed cost is spread over fewer units, the per-unit cost rises further. A tariff that discourages consumption can make the next tariff higher because consumption fell. This is the trap energy pricing politics keeps falling into, while consumers feel they are running backwards.

Now comes the part where I turn against the received reading — and I think it is necessary, because the easiest habit of our time is to make a grand sentence out of any number.

The most debated element — the incremental package for industry — is not the problem anyway. It is a bandage, not a cure. And the disease's real cure is not cross-subsidy as such, but the question of which consumer is paying for another's bill.

Industrial representative Aamir Sheikh demanded Nepra immediately suspend the incremental package and apply FCAs (Fuel Charges Adjustment) prospectively. He argued the package benefits only a handful of industries while more than 90 per cent of consumers bear its cost. That figure — 90 per cent — put on paper, is not a complaint but a structural allegation. But I will not record it without caution. The claim was made at a public hearing reported in the press, and the report contains no independent consumer survey or list of beneficiaries. The cross-subsidy claim is strong, but the ledger is not public. Until the list of beneficiaries and payers is disclosed, each side can claim the heavier scale.

I want to build a small bridge to history here — a bridge, not a corridor. In Sharjah in 2026, when a dust storm rolled over the ground, I learned a straight lesson: the loudest man on the field and the man who matters most are not the same person. That day the scorecard thrilled everyone with 143, but the heat and the wind set the true temper of the game. The same is being written in electricity tariffs. The headline is eight per cent; the heat is capacity charges. If we read only the headline, we make the same mistake thousands of spectators made while watching the scorecard and not noticing the dust.

I must also record that this whole analysis is surrounded by a peculiar silence. The Stage-1 report I am working from labels the item 'cricket_asia', although its subject is not cricket but an energy regulatory hearing. That small-looking error carries a large meaning. It shows how every news item touching Pakistan gets cricket goggles put on it automatically. A country's name does not decide its sport. When a report carries the wrong label, you should take it off first and see what is inside. I say this plainly because the way we announce a pitch's nature without looking at it is the same way we understand a country's economic decisions only through its cricket. That is the cardinal sin of analysis, and it sits in the staging report of this news.

Now the question every report feels most pressured to avoid.

Capacity charges sit at Rs1.914 trillion, the average PPP will arrive as a rising number over the next few years, and most importantly — this is not yet a final tariff. Nepra can modify or reject it. The number in the headline is a proposal; it can change after regulatory review. So when someone says 'the bill has risen eight per cent', the correct answer is that the bill is not yet fixed — but the direction it is heading is clear now.

This is where I owe my readers honesty. I have no authority to make a forecast, but there is a statement I can put on record: if capacity charges are not addressed, then the next time fuel becomes cheaper, relief will still not appear in the bill. That is a falsifiable claim — and I leave it as is, so the documents can settle it in the coming months.

Walking out of that Karachi hearing room, what stayed with me was no percentage. It was the tired eyes of officials who know each decimal before them is someone's household bill, some factory's cost, the breath of a farmer's irrigation pump. And I remembered how in 2026, during the Azharuddin affair, the real story I found was not the star's but the groundskeeper's. Here too, the story is not of the star consumer but of the formula behind the curtain that collects half the bill for electricity never generated.

Next time you see a new line on your electricity bill, do not just look at it. Look also at what is not written there but passes through your pocket every month. And do not ask how much the tariff will rise — ask what empty thing you are paying rent for.