NEPRA approves salary hike, bonuses

Okays Rs1.585b payouts for CPPA-G despite power-sector woes

ISLAMABAD:

The National Electric Power Regulatory Authority (Nepra) has allowed an increase in salaries, bonuses and performance increments for the Central Power Purchasing Agency (Guarantee) Limited (CPPA-G) for FY 2025-26.

The regulator has not only allowed an increase in salaries but also allowed bonuses and performance increments for the employees of CPPA-G despite the fact that the power sector is plagued by inefficiencies, poor performance and bad governance.

The power-sector regulator has issued a decision relating to the CPPA-G Market Operation Fee for FY 2025-26. CPPA-G had sought approval for the market operation fee amounting to Rs14.67 per kW/month (including prior year adjustment and miscellaneous adjustments).

It sought a net revenue requirement of Rs4.664 billion. It also sought approval of legal expenses through periodic tariff adjustments and permission to actualise expenditures based on audited accounts.

Regarding employee costs, the regulator allowed salary increases based on a 4.49% average inflation (the Consumer Price Index). It also allowed performance increments averaging around 6%. The total allowed increase amounted to 10.49%, instead of the requested 11%.

It endorsed salaries which would cost Rs1.585 billion and the employee benefits allowed were Rs249 million. CPPA-G had requested Rs199 million (1.5 gross salary) on account of bonus for employees. Nepra approved one basic salary amounting to Rs55.64 million.

CPPA-G proposed hiring dozens of additional employees while Nepra approved costs for already-hired 26 employees. It allowed an amount of Rs109.71 million. The regulator said that future recruitments will require separate justification.

CPPA-G had requested Rs32 million on account of training. The regulator approved Rs8.58 million, based on actual expenditure, noting that the market operator function has shifted to ISMO.

The power-sector regulator rejected the hiring of headhunting consultants, succession planning consultants and the compensation survey. It allowed testing services at a cost of Rs1 million and Rs0.7 million for board evaluation consultant. It also allowed Rs2 million for hiring tax consultants.

The company had requested Rs316 million on account of administrative costs, but the regulator allowed Rs271.11 million.

Major reductions included telephone and communication expenses, board and audit fees, outsourced services and insurance costs. Nepra also disallowed all ESG (environmental, social & governance) expenses, stating such CSR-type activities should not be passed on to electricity consumers.

The company had also requested repair & maintenance/IT services cost of Rs241 million, but the regulator approved Rs137 million. Reductions were made mainly in IT services, vehicle expenses, and repair & maintenance costs. CPPA-G had requested Rs164 million, primarily for capital expenditures. Nepra approved many essential operational expenses but significantly reduced several requested costs as well.