Nepra takes notice of PPIB’s approval of $300 per MW in tariff

ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) has decided to initiate suo motu proceedings against the Private Power Infrastructure Board (PPIB) for approving charges of up to $300 (Rs83,400) per megawatt (MW) on the end consumers for its project facilitation services in the power, transmission, and distribution sectors.

Nepra has scheduled a hearing on the matter for February 13, 2025, to assess the legitimacy and impact of these charges.

The PPIB wants consumers to pay its fee of $250-300 per MW on 19,677MW of electricity installed in the country by the projects, which it processed and facilitated in areas of power generation, transmission and distribution.

While the government has been actively renegotiating power agreements to lower electricity tariffs—including scrapping contracts with six Independent Power Producers (IPPs) and shifting 15 others from a “take-or-pay” to a “take-and-pay” model—it has come under scrutiny for allowing the Private Power Infrastructure Board (PPIB), a fully state-owned entity, to impose a fee of up to $300 per megawatt (MW) on consumers as a pass-through charge in the tariff structure.

In response, Nepra has taken suo motu notice of the issue, scheduling a hearing on February 13, 2025. The regulator has invited stakeholders to submit intervention requests within seven days for participation in the proceedings.

In its submission to Nepra, the PPIB defended the fee, citing legal backing under Section 23, read with Section 5 of the Private Power and Infrastructure Board Act. The board had approved the charges under the Private Power and Infrastructure Board (Fee and Charges) Rules 2018, which were officially notified via SRO 406(1)/2019 in March 2019. These rules apply to all IPPs, transmission, and distribution companies facilitated by the PPIB.

Initially, an annual fee of $300 per MW was levied on IPPs, payable on each anniversary of the Commercial Operation Date (COD) of their respective projects. This fee was later reduced to $250 per MW in June 2022, as per a revised notification published in the official gazette on June 15, 2022.

The Nepra hearing will focus on three critical questions: 1. Whether the annual PPIB fee of $250 per MW charged to IPPs is legitimate. 2. Whether PPIB has any involvement in post-COD operations of IPPs and if the fee is justified. 3. Whether PPIB’s fee should be passed on to electricity consumers.

Industry experts argue that the private power market is evolving, and in the near future, power distribution companies (DISCOs) will operate under the Competitive Trading Bilateral Contracts Market (CTBCM) model, selling electricity directly to business consumers. Under this framework, PPIB’s role will be significantly diminished, especially as the government has already committed to several power projects under the Integrated Generation Capacity Expansion Plan (IGCEP) for the next decade—projects in which PPIB has no role. Experts believe Nepra and other stakeholders are likely to challenge PPIB’s attempt to impose these charges on consumers during the upcoming hearing, potentially blocking its implementation.