Islamabad Outstanding payments to Independent Power Producers (IPPs) in Pakistan have climbed sharply to Rs. 1.2 trillion, with nearly Rs. 500 billion owed to Chinese power companies, officials revealed during a public hearing held by the National Electric Power Regulatory Authority (NEPRA) on Tuesday.
The disclosure was made at a hearing chaired by NEPRA Chairman Waseem Mukhtar, convened to review a petition filed by the Central Power Purchasing Agency–Guarantee (CPPA-G) seeking approval of its market operator fee for the fiscal year 2025–26.
CPPA-G Seeks Higher Revenue Requirement
During the proceedings, CPPA-G officials informed the regulator that the agency has requested a revenue requirement of Rs. 2.887 billion for FY26, excluding prior year adjustments. When these adjustments are factored in, the total requirement rises significantly to Rs. 4.664 billion.
Officials explained that the rising financial burden reflects increasing operational costs amid broader stress in the power sector, which continues to grapple with circular debt and delayed payments to power producers.
Rising Operational and Salary Costs
According to the briefing, CPPA-G’s general establishment cost for the upcoming fiscal year is estimated at Rs. 2.225 billion, marking an increase of 10.75 percent compared to FY25.
A major contributor to the rise is employee compensation. Salaries and benefits are projected to increase by 17 percent, reaching Rs. 2.175 billion. Within this, pay and allowances alone are estimated at Rs. 1.627 billion, reflecting a 3 percent increase, largely attributed to inflationary pressures and cost-of-living adjustments.
Officials clarified that these increases come despite a reduction in staff strength, noting that 20 employees were transferred to the newly established Independent System and Market Operator (ISMO), while 26 employees resigned during the previous year.
Administrative Expenses Also Up
Administrative expenses for FY26 are expected to reach Rs. 322 million, representing an increase of nearly 7 percent compared to the previous year. CPPA-G officials said the rise is driven by higher utility costs, regulatory compliance requirements, and operational overheads.
Broader Power Sector Challenges
The revelation of Rs. 1.2 trillion in unpaid IPP dues, including substantial liabilities to Chinese firms operating under the China-Pakistan Economic Corridor (CPEC) framework, underscores the deepening financial strain in Pakistan’s power sector. Analysts warn that continued payment delays risk undermining investor confidence and could affect future energy investments.
Next Steps
After hearing the submissions and reviewing the petition, NEPRA concluded the proceedings and reserved its judgment. The regulator is expected to announce its decision after further internal deliberations.
The outcome will have implications not only for CPPA-G’s operational funding but also for electricity tariffs and the government’s broader efforts to stabilise the power sector.
