Industries blast govt as capacity payments soar again

ISLAMABAD: Industrial consumers on Thursday rejected the government’s claims of reducing tariffs and controlling circular debt through revised deals with independent power producers (IPPs), as capacity payments have surged once again, piling fresh pressure on consumers.

The National Electric Power Regulatory Authority (Nepra) reserved its decision on a petition filed by power distribution companies (Discos) seeking approval to recover Rs8.4 billion from consumers for the first quarter of FY2025-26 (July-September).

The public hearing was marked by criticism from industrial users, who accused the government of making cosmetic reforms while the debt crisis deepens.

During FY2024-25, capacity payments plunged. In third quarter (Jan-March), it reduced by Rs47.1 billion and Rs53.7 billion in the fourth (April-June), after the government scrapped several power purchase deals with IPPs, but it has now again increased.

According to the petition, Discos are seeking Rs21.7 billion in capacity charges, offset by negative adjustments of Rs13.3 billion from lower system losses and operational savings. Lesco posted the highest capacity charge at Rs8.45 billion, followed by Mepco (Rs4.35 billion), Gepco (Rs4.23 billion) and Fesco (Rs2.34 billion). Hesco showed the largest negative adjustment of Rs3.21 billion.

Discos reported mixed consumption trends with Fesco’s demand rising by 6.8 percent, driven by a 28 percent jump in industrial use, while Gepco recorded an 11 percent rise in industrial and 3 percent in commercial demand. Hesco’s consumption grew 4.5 percent, and Lesco’s by 4.4 percent but Mepco’s fell 5.3 percent and Qesco also reported a decline.

“Industry cannot survive like this — decisions made in Islamabad’s air-conditioned rooms don’t work in factories,” said one frustrated industrial consumer. Another, Tanveer Bari, urged NEPRA to reject the tariff hike, arguing that rising capacity payments prove “nothing has really changed” despite IPP deal revisions.

Rehan Jawed from Karachi called the government’s incremental power package “ineffective,” saying the offered rate of Rs22.90 per unit should be cut to Rs16 to stimulate consumption. He added that industries continue to shoulder a Rs160 billion cross-subsidy burden for other consumers.

Nepra Member (Technical) Rafiq Shaikh warned that circular debt would persist unless losses and poor recoveries were fixed. The regulator also expressed displeasure at the Power Division’s absence from the hearing and decided to issue a letter of censure. NEPRA will announce its final decision after reviewing the Discos’ data.