Nepra approves controversial $58bn power plan

The National Electric Power Regulatory Authority (Nepra) has conditionally approved Pakistan’s controversial Integrated System Plan (ISP) 2025.

The 11-year plan covers the period from 2025 to 2035. It involves an estimated investment of around $58 billion in power generation and transmission.

The approval came despite reservations from all three Nepra members, including the regulator’s chairman. In a 45-page decision, the members recorded more than 12 pages of dissenting and advisory observations.

The reservations mainly concern major changes to the power plan. Members also questioned why some projects were included while others were excluded.

They raised concerns over the alleged bypassing of the Council of Common Interests (CCI). The CCI is the constitutional forum responsible for matters involving national energy policy and planning.

Nepra approved the plan only to the extent of the revised base and recommended case of the Integrated Generation Capacity Expansion Plan (IGCEP) 2025. The approval excludes the Battery Energy Storage System (BESS) and K-Electric’s transmission line planned for 2028.

The approval is also subject to the regulator’s observations being addressed.

Nepra noted differences between the positions of the Independent System and Market Operator (ISMO) and the Power Planning and Monitoring Company (PPMC). Both organisations operate under the power division.

The regulator also objected to changes made to the earlier 10-year investment plan. It said major changes to the National Electricity Policy or National Electricity Plan could not be made solely on the recommendations of a technical committee or the power division.

According to the plan, three electricity demand scenarios were considered. These include high, medium and low growth.

The projected average GDP growth rates under the three scenarios are 6.37 per cent, 4.95 per cent and 3.52 per cent, respectively.

The low-growth scenario was selected as the reference case for generation expansion. It assumes the addition of 26,045 megawatts of generation capacity.

Of this total, 17,485MW has already been committed, while another 8,560MW has been identified for optimisation.

The plan also proposes retiring around 2,577MW of existing generation capacity. After the planned additions and retirements, total installed capacity is expected to reach 62,657MW.

The reference plan includes around 8,120MW of net-metering capacity. The estimated cost of additional generation capacity stands at approximately $47.08 billion.

Transmission infrastructure will require another major investment. Ongoing and committed transmission projects are estimated to cost around $4.6 billion.

New transmission expansion projects would require an additional $6.05 billion. This puts the total projected transmission investment at about $10.65 billion during the planning period.

The proposed transmission projects include power evacuation systems and network reinforcement. They also cover new extra-high-voltage substations, transformer upgrades and voltage-control facilities.

The plan has also made provisions for the Gwadar and Makran regions. Electricity imports from Iran have been affected by the ongoing geopolitical tensions involving Iran and the United States.

As a result, the plan allows a 40MW on-site power plant to be added for the region. Extending the national grid to these areas is currently considered technically and economically difficult.

Nepra also raised questions about renewable energy projects linked to K-Electric. The regulator noted that several competitive renewable projects had initially been excluded from the plan by ISMO.

However, a 269MW JCM Wind-Solar Hybrid Project at Dhabeji was later included for development during the current fiscal year.

The regulator criticised ISMO for disclaiming responsibility for the accuracy and completeness of the data used to prepare the plan. Nepra said such disclaimers raised concerns about the reliability of the projections and information underpinning the investment decisions.

Nepra also refused to approve an estimated $900 million investment in Battery Energy Storage Systems at this stage.

The authority said a comprehensive technical and economic assessment was required first. The study must establish the need for storage systems, their appropriate capacity, operational requirements and cost-effectiveness.

Another major concern involves the possible impact of the plan on electricity consumers.

Nepra pointed out that ISMO and PPMC had presented conflicting assessments regarding the effect of the ISP on consumer-end electricity tariffs.

The regulator directed that the tariff impact must be properly calculated and incorporated into the main plan.

PPMC has projected that the consumer-end base tariff could rise to Rs37.28 per unit by 2035, compared with Rs34 per unit in 2024-25.