Gaps in demand estimates: Nepra chief calls for transparent power generation projections

Islamabad: Nepra Chairman Waseem Mukhtar has expressed concerns over discrepancies in demand projections by ISMO, DISCOs, and CPPA-G, urging a transparent mechanism to align future power generation capacity with actual and projected demand while protecting consumers from excessive capacity costs. In his additional note on the Integrated System Plan (ISP) 2025-35, Mukhtar emphasized the need to address the risk of surplus generation capacity, which has resulted in significant capacity payments and increased burden on consumers.

He noted that Pakistan's power sector is grappling with an issue of surplus generation capacity, leading to higher capacity charges per unit and suppressing demand as consumers opt for cheaper alternative sources while relying on the grid as a backup. Mukhtar attributed this self-reinforcing cycle to declining grid demand, underutilization of generation assets, and higher per-unit capacity costs, which adversely impact affordability, efficiency, and long-term sustainability of the power sector.

The Chairman also highlighted transmission constraints as a contributing factor, stressing the need for executing transmission projects on a priority basis to facilitate efficient evacuation of low-cost generation while ensuring that investments remain aligned with prevailing and projected demand to avoid creating additional stranded or underutilized capacity.

Mukhtar questioned the treatment of projects previously categorized as 'committed' under certain assumptions and criteria prescribed by the Council of Common Interests (CCI) in 2021, noting that ISMO had excluded several projects from the ISP that had previously been considered committed due to rising rooftop solar penetration and slowing demand growth.

He urged a rational and transparent mechanism to align upcoming generation capacity with prevailing and projected demand while safeguarding consumer interests, emphasizing that committed projects should remain subject to clearly defined progress criteria and milestones. Mukhtar also called for merit-based and transparent criteria in including all generation projects in the ISP, questioning the consistency of assumptions and projections submitted by various stakeholders, warning that divergence among the projections undermines the certainty and robustness of the overall planning exercise.