NEPRA faces scrutiny over electricity costs, capacity

The National Electric Power Regulatory Authority (Nepra) chairman provided insights during a Senate panel meeting, shedding light on the state of the country's electricity capacity.

He stated that Pakistan's total electricity capacity currently stood at 4,400 megawatts. However, an average of 2,500 to 2,600 megawatts was being produced, with 70% of this production attributed to independent power producers (IPPs).

The Senate Standing Committee on Cabinet Secretariat, presided over by PML-N Senator Saadia Abbasi, convened at the Parliament House to discuss these energy-related matters.

Nepra's Chairman, Waseem Mukhtar, also informed the committee about the cost of electricity for consumers, revealing that they were being charged Rs45.06 per unit. This cost encompassed various taxes, primarily in the form of capacity and energy charges, along with distribution companies' margins.

Recent macroeconomic indicators had led to an increase of Rs3.17 per unit.During the meeting, Senator Mushtaq Ahmad Khan inquired whether Nepra had issued power generation licenses to IPPs. The Nepra Chairman clarified that these licenses were provided by the government. Senator Mushtaq emphasized the need to review agreements with IPPs, which he considered "unholy," in order to address the country's energy crisis.

He expressed concern that Nepra had not effectively delivered affordable energy to consumers and had instead safeguarded the interests of IPPs.

Senator Saadia directed Nepra to furnish details regarding fuel price adjustment charges and capacity payments made to IPPs in the current year.The Senate panel also deliberated on proposed increases in gas prices and their utilization across the country.

Officials provided data indicating that around 2,900 million cubic feet of natural gas was being produced domestically, with varying contributions from different provinces.

The power sector consumed 28% of the gas, domestic users 26%, industries 18%, and fertilizer companies 22%. Despite fertilizer companies being major consumers of inexpensive natural gas, the prices of their products had surged, leaving farmers to bear the brunt of inflated rates.

An official clarified that gas was being supplied to fertilizer companies at the old price of Rs302 per unit. However, the price of urea had doubled to Rs1,700 per bag since 2020. Gas prices had not seen an increase since 2020, but a letter had been sent to the Petroleum Division requesting a rate hike to address the circular debt of Rs2 trillion in the sector.

The price adjustment was aimed at meeting the heightened gas demand expected during the upcoming winter season.

The committee's chairperson also inquired about the status of the long-delayed Iran-Pakistan (IP) gas pipeline project.

Officials informed the panel that negotiations on the IP gas pipeline had been accelerated in the past year. Nevertheless, commercial and foreign concerns remained substantial obstacles to the project's completion.

To address these issues and objections reportedly raised by the United States, the committee decided to summon the Attorney General for Pakistan (AGP) and officials from the Ministry of Foreign Affairs for the next meeting.

The meeting was attended by Senators Muhammad Akram, Syed Waqar Mehdi, Mushtaq Ahmad Khan, Saifullah Sarwar Khan Nyazee, Naseebullah Bazai, Khalida Ateeb, and Kamil Ali Agha, along with the Chairman of the Oil and Gas Regulatory Authority (Ogra), Masroor Khan, as well as senior officers from the Petroleum Division and relevant departments.