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The power sector is facing stability, stability challenges

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ISLAMABAD: Despite historic addition to power generation capacity, the country’s power sector continues to be in a dismal state and is facing major challenges of sustainability and affordability.

This has been concluded by the National Electric Power Regulatory Authority (Nepra) in its flagship State of the Industry Report 2017 in which it also complained of a very compromised regulatory role to deal with emerging issues.

The regulator said the power sector suffered Rs112 billion accumulation of circular debt due to its inability to meet targets for loss reduction (Rs31bn) and recovery (Rs81bn) during the fiscal year 2016-17. At the same time, the increased generation capacity would keep adding to the overall electricity tariff for consumers because of increased capacity payments.

Nepra said the capacity payments to private power companies amounted to Rs280bn in 2015-16, which increased to Rs350bn in 2016-17 and to Rs490bn in 2017-18. As a consequence, the per unit (kwh) cost of capacity payment, which stood at Rs3.40 in 2015-16, increased to Rs4.1 per unit in 2016-17 and to Rs5 in 2017-18.

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