NEPRA clears tariff, KAPCO rejoins grid

Regulator extends tariff period after system stability warnings; plant resumes operations

ISLAMABAD:

Kot Addu Power Company Limited (KAPCO) has resumed operations and rejoined the national grid after more than ten weeks of suspension that began on October 1, 2025. According to an official statement issued on Wednesday, the tariff issue that halted its operations has now been resolved, enabling the restoration of one of the system's key Black Start — capable plants and strengthening supply reliability in southern Punjab.

The interruption stemmed from tariff limitations under the previously approved Indicative Generation Capacity Expansion Plan (IGCEP) and Power Acquisition Programme (PAP). A decision by the National Electric Power Regulatory Authority (NEPRA) on December 9 removed this restriction by provisionally extending KAPCO's tariff period and allowing immediate restoration of its 495MW gas/RLNG and 478MW low sulphur fuel oil (LSFO) generation blocks.

NEPRA's determination follows extensive submissions from the Independent System and Market Operator (ISMO), National Grid Company of Pakistan Limited (NGC), Multan Electric Power Company (MEPCO), Central Power Purchasing Agency (Guarantee) Limited (CPPA-G), and the Ministry of Energy. These entities warned that KAPCO's suspension was jeopardising system stability, constraining operations at the Multan and Muzaffargarh grid stations, and disrupting reliable supply to 13 MEPCO grids.

The regulator acknowledged that KAPCO's continued operation remains essential due to ongoing transmission constraints and noted that the plant is included in the draft IGCEP 2025-35 for this reason. The decision permits KAPCO to operate under the approved tariff terms until the IGCEP is finalised, or for up to three years as allowed under the Tripartite Power Purchase Agreement.

NEPRA's ruling also addresses tariff clarifications sought by KAPCO, including correction of the variable operation and maintenance (O&M) components and revisions to the treatment of LSFO inventory costs in line with industry practice. The authority maintained its stance on switchyard charges and upheld the established methodology for calculating working capital costs.