NEPRA Evaluates WAPDA’s Request for 80% Revenue Increase Amidst Business Scrutiny

September 12, 2025

Islamabad – A contentious proposal to considerably raise electricity tariffs charged by the Water and Power Development Authority (wapda) is under intense examination by the National Electric power Regulatory Authority (Nepra). The public hearing, held on Thursday, spotlighted Wapda’s request for a tariff hike exceeding 80 percent, sparking a critical debate about the association’s financial health and operational efficiency.

Wapda’s Revenue Requirements Surge

During the hearing, presided over by nepra member for Khyber Pakhtunkhwa Maqsood Anwar Khan, Wapda officials detailed a base revenue requirement of Rs179 billion for the current fiscal year. this figure represents a considerable jump from the Rs96.93 billion previously approved by Nepra for the fiscal year 2023. This translates into a proposed increase in the annual tariff from Rs3.10 per unit to Rs5.67 per unit – a rise of over 83 percent.

However, the financial picture is further complicated by accumulated regulatory revenue gaps from the past three years.When these are factored in, Wapda’s total revenue requirement for the current fiscal year climbs to Rs318.5 billion, a sharp increase compared to the Rs119.96 billion recorded in fiscal year 2023.

Additional obligations, including payments for net hydel profit to the provinces of Khyber Pakhtunkhwa and Punjab, and azad Kashmir, bring the final revenue requirement to Rs365 billion. This is based on a projected electricity generation of 31,563 gigawatt-hours for the year, up from 31,286 gigawatt-hours in fiscal year 2023. Consequently, wapda is requesting an approximate 90 percent increase in the bulk hydropower rate, setting it at about Rs11.55 per kilowatt-hour, a substantial leap from the current Rs6.10 per unit.

Performance Questioned by Nepra

Nepra’s member (technical) from Sindh, Rafique Shaikh, directly challenged Wapda’s performance on recently completed hydropower projects. He specifically inquired whether any project had successfully met its established generation targets. this pointed query highlighted concerns about the effectiveness of Wapda’s project management and its ability to deliver on promised output.

Wapda representatives countered that thier performance should be evaluated holistically, considering their broader contributions to water and food security, flood protection, and overall electricity generation. They maintained that their performance is inherently linked to natural factors like hydrology and irrigation needs, and shouldn’t be judged on a project-by-project basis like independent power producers.

Shaikh refuted this argument, stating that calls for a comprehensive evaluation would be more appropriate if Wapda was requesting a tariff reduction rather of a significant increase.

Rising Costs and Financial Pressures

Wapda’s petition for Rs365 billion in revenue reflects a growing list of financial pressures. A substantial Rs99 billion is allocated for debt servicing on ongoing projects, and over Rs15 billion is earmarked to cover a proposed 100 percent increase in employee salaries over a three-year period, up from the current Rs7.41 billion. Security concerns are also impacting operations, with some projects temporarily offline.

The request also includes Rs174 billion to address financial shortfalls from the previous three fiscal years – Rs22.35 billion for fiscal year 2023, Rs56 billion for fiscal year 2024, and Rs61 billion for fiscal year 2025. net hydel profit payments are projected at Rs29.5 billion for Khyber Pakhtunkhwa,Rs11.7 billion for Punjab, and Rs5 billion for Azad Kashmir.

Wapda is also seeking an 85 percent increase in the return on investments and operating costs, projecting Rs179 billion for fiscal year 2026, compared to the Rs97 billion resolute for fiscal year 2023. This includes an increase in operational and maintenance expenses from Rs24 billion to approximately Rs39.59 billion over the same period.

Financial Metric	FY23 (Rs Billions)	FY26 (Projected Rs Billions)	Percentage Change
Base Revenue Requirement	96.93	179	84.7%
Total Revenue Requirement	119.96	318.5	165.3%
O&M Expenses	24	39.59	64.9%

Did You Know? Hydropower currently accounts for approximately 30% of Pakistan’s total electricity generation capacity, making Wapda a crucial player in the country’s energy mix.

Pro Tip: Understanding the intricacies of electricity tariffs and regulatory processes can empower consumers to advocate for fair pricing and sustainable energy practices.

What impact do you foresee this tariff increase having on Pakistani households? And, what steps could Wapda take to improve project efficiency and reduce its reliance on tariff hikes?

Understanding Electricity Tariffs and Regulatory Frameworks

Electricity tariffs are complex, influenced by factors like fuel costs, generation mix, transmission losses, and regulatory approvals. Regulatory authorities like Nepra play a vital role in balancing the financial viability of power companies with the affordability of electricity for consumers. globally, governments and regulators are increasingly focusing on sustainable energy sources and efficient energy management to mitigate the impact of rising energy costs. According to the International Energy Agency’s World energy Outlook 2024, investment in renewable energy is crucial for achieving a secure and sustainable energy future.

Frequently Asked Questions About Wapda Tariffs

• What is a bulk generation tariff? The bulk generation tariff is the per-unit cost of electricity produced by power plants and transmitted to distribution companies.
• What is net hydel profit? Net hydel profit is a payment made by the federal government to provinces that host hydropower plants, based on the electricity generated.
• How does Wapda’s performance affect electricity prices? Inefficient project management and lower-than-expected generation can lead to higher costs, which are frequently enough passed on to consumers through tariff increases.
• What role does Nepra play in tariff determination? Nepra reviews tariff petitions from power companies,assesses their financial needs,and approves tariffs based on a thorough evaluation process.
• what are O&M costs in electricity generation? O&M costs,or operations and maintenance costs,cover expenses related to running and maintaining power plants and infrastructure.
• What is the impact of debt servicing on electricity tariffs? high debt servicing costs can significantly increase the overall cost of electricity generation and distribution.
• How does the security situation affect power generation? Security concerns can lead to project delays and disruptions, impacting electricity supply and perhaps increasing costs.

What are the primary factors contributing to WAPDA’s request for an 80% revenue increase?

NEPRA Evaluates WAPDA’s Request for 80% Revenue Increase Amidst Buisness Scrutiny

Understanding WAPDA’s Revenue Increase Proposal

The Water and Power Development Authority (WAPDA) recently submitted a request to the National Electric Power Regulatory Authority (NEPRA) for an unprecedented 80% increase in electricity tariffs. This proposal has ignited significant debate and scrutiny from businesses, consumers, and energy sector analysts across Pakistan. The core justification cited by WAPDA centers around rising operational costs, including fuel prices, transmission losses, and debt servicing. however, the magnitude of the proposed increase is raising concerns about affordability and its potential impact on the national economy.

Key factors Driving the request: A Deep Dive

Several interconnected factors are contributing to WAPDA’s financial pressures and the subsequent tariff hike request. These include:

* Global Fuel Prices: Fluctuations in international fuel markets, notably oil and gas, directly impact the cost of power generation. Pakistan relies heavily on imported fuels, making it vulnerable to price volatility.

* Circular Debt: The persistent issue of circular debt – a cascading cycle of unpaid bills between WAPDA, power generation companies (GENCOs), and the goverment – continues to strain WAPDA’s finances. This debt burden necessitates increased revenue to maintain operational viability.

* Transmission & Distribution (T&D) Losses: High T&D losses, stemming from technical inefficiencies and electricity theft, represent a significant financial drain. Reducing these losses is crucial for improving WAPDA’s financial health. Current estimates place T&D losses around 17-18%, a figure considered unacceptably high.

* Debt Servicing: WAPDA carries a ample debt burden, requiring significant funds for debt servicing. This financial obligation is a major component of its overall expenditure.

* Capacity Payments: Pakistan’s power sector operates with significant excess capacity, leading to substantial capacity payments to autonomous power producers (IPPs) even when electricity isn’t being utilized.

NEPRA’s Evaluation Process: Scrutiny and Public Hearings

NEPRA is currently undertaking a thorough evaluation of WAPDA’s request. This process involves:

1. Data Verification: NEPRA is meticulously verifying the data submitted by WAPDA,scrutinizing cost breakdowns,and assessing the validity of the justifications provided.
2. Public Hearings: NEPRA has scheduled public hearings to gather input from stakeholders, including business associations, consumer groups, and industry experts. These hearings provide a platform for voicing concerns and presenting alternative perspectives.
3. Independent Analysis: NEPRA is conducting its own independent analysis of WAPDA’s financial performance and operational efficiency.
4. Impact Assessment: A key component of the evaluation is assessing the potential impact of the proposed tariff increase on various sectors of the economy and on consumers.

Business Impact: Concerns and Potential Consequences

The proposed 80% revenue increase has sparked widespread concern within the business community. Key concerns include:

* Increased Production Costs: Higher electricity tariffs will directly translate into increased production costs for businesses, perhaps eroding profitability.

* Reduced Competitiveness: Increased costs could make Pakistani businesses less competitive in the global market.

* Inflationary Pressures: Higher energy prices are likely to contribute to broader inflationary pressures within the economy.

* Potential for Business Closures: For small and medium-sized enterprises (SMEs) operating on thin margins, the tariff increase could be unsustainable, potentially leading to business closures and job losses.

* Impact on Export-Oriented Industries: Export-oriented industries, already facing challenges, will be particularly vulnerable to the impact of higher energy costs.

Past Context: past Tariff Adjustments & Their Effects

Pakistan’s power sector has a history of frequent tariff adjustments.Examining past adjustments provides valuable insights:

* 2019-2021: A series of tariff increases during this period, driven by circular debt and fuel price hikes, led to protests and economic disruption.

* 2022: another significant tariff increase was implemented to address the growing circular debt crisis.

* 2023: Further adjustments were made, citing rising global energy prices and the need to comply with IMF conditions.

These past adjustments demonstrate a pattern of reactive tariff increases, often implemented as a response to immediate financial pressures rather than as part of a long-term sustainable solution.

Potential Alternatives & Mitigation Strategies

Several alternative strategies could be explored to mitigate the impact of the proposed tariff increase:

* Reducing T&D Losses: Aggressively tackling T&D losses through investments in infrastructure upgrades and stricter enforcement against electricity theft.

* Improving Efficiency: Enhancing the efficiency of power generation plants and optimizing operational processes.

* Diversifying energy Sources: Investing in renewable energy sources, such as solar, wind, and hydro, to reduce reliance on imported fuels.

* Addressing Circular Debt: Implementing a comprehensive plan to resolve the circular debt crisis,including timely payments to GENCOs and improved financial management.

* Targeted Subsidies: Providing targeted subsidies to vulnerable consumers and industries to cushion the impact of higher tariffs.

* Promoting Energy conservation: Implementing energy conservation programs to reduce overall electricity demand.

The Role of Renewable Energy in Long-Term Sustainability

Investing in renewable energy sources is crucial for achieving long-term energy