The Central Power Purchasing Agency (Guarantee) Limited (CPPA-G) has asked NEPRA to set the 2027 power purchase price (PPP) at Rs27.309 per kWh in its base case. The forecast is dated 12 October and NEPRA will hear it on 3 November. It covers 130,081 GWh of sales, 115,747 GWh to the ex-WAPDA distribution companies and 14,334 GWh to K-Electric, at a total cost of Rs3,552.4 billion. NEPRA's reference for calendar year 2026, set on 7 January, was Rs25.3213 per kWh on 125,822 GWh, or Rs3,186.0 billion.
Per unit, the base case is Rs1.988 (7.85%) higher. Projected sales are also 3.4% higher, so the total bill grows faster, by Rs366.5 billion or 11.5%. The calculations below split that change into its four cost components, using the cost tables in CPPA-G's 2027 report and NEPRA's 2026 determination.
Where the Rs1.99 comes from
Fuel cost rises from Rs7.738 to Rs10.141 per kWh, an increase of Rs2.403. In rupees, the fuel bill grows from Rs973.6 billion to Rs1,319.1 billion, up 35.5%. Variable operation and maintenance adds Rs0.153 per unit, which is 43.8% more in total, though from a small base. Service charges are Rs1.909 per unit, against the Rs1.9075 use-of-system line in the 2026 determination. They cover the NGC and HVDC transmission charges and CPPA-G's own fee.
Capacity charges fall. CPPA-G projects Rs1,914.4 billion, against Rs1,923.3 billion approved for 2026, a reduction of Rs8.9 billion or 0.5%. Because that bill is spread over more units, capacity per kWh falls from Rs15.286 to Rs14.717, or Rs0.569 less. Fuel therefore accounts for 121% of the net per-unit increase, by TEI's calculation. If capacity per unit had stayed at the 2026 level, the price would have risen by about Rs2.56.
- Fuel: Rs7.738 to Rs10.141 per kWh (+Rs2.403)
- Variable O&M: Rs0.390 to Rs0.543 (+Rs0.153)
- Capacity: Rs15.286 to Rs14.717 (-Rs0.569)
- Service charges: Rs1.908 to Rs1.909 (+Rs0.001)
- Total: Rs25.321 to Rs27.309 (+Rs1.988)
As a result, fixed costs make up a smaller share of the bill. Capacity and service charges were 67.9% of the approved 2026 cost and are 60.9% of the 2027 base case. The amount itself hardly changes: Rs2,162.7 billion in 2027, against Rs2,163.3 billion this year. It is payable whatever happens to demand.
Why fuel jumps
The fuel line assumes Brent crude at US$92 a barrel, the average of daily prices from 1 May to 9 September 2026. NEPRA's 2026 reference used US$67. CPPA-G's report says Brent rose from about US$69 in February 2026 to roughly US$127 by the end of March as the conflict in the Middle East escalated. It adds that, given the volatility, the published fuel-price forecasts it would normally rely on are irrelevant. The base-case price for RLNG is US$19.96 per MMBTU. It combines long-term Qatari contracts, at a weighted 11.96% of Brent, with spot cargoes at a 50% premium, and assumes Qatar resumes full supply after its declaration of force majeure. Imported API-4 coal is taken at US$113 a tonne. Local gas for power stays at the OGRA rate of Rs1,225 per MMBTU.
The rest of the generation plan offers little relief. ISMO's plan assumes normal hydrology, with 40,191 GWh from hydropower. No plant is due to be commissioned in 2027. The only retirement is Kohinoor Energy, whose term ends on 28 November 2027. The extra 4,259 GWh of sales in the base case therefore falls on the existing fleet, at the new fuel prices.
The fuel assumption also produces the widest spread of outcomes in the report. Across CPPA-G's scenarios, the fuel bill ranges from Rs1,133.5 billion in the ideal case, with Brent at US$70, to Rs1,523.5 billion in Worst Case II, with Brent at US$118 and the rupee at 290 to the dollar. The gap is Rs390 billion, or Rs3.00 per kWh on base-case volumes. Capacity charges in the same scenarios differ by Rs47.6 billion.
The exchange rate and the capacity bill
CPPA-G says the capacity price is primarily sensitive to the exchange rate, KIBOR and SOFR, and local and international inflation. In the two worst cases, CPPA-G assumes Rs290 to the dollar instead of Rs279, a rupee 3.9% weaker. Capacity charges then rise to Rs1,962.0 billion, Rs47.6 billion or 2.5% above the base case. By TEI's calculation, that is about Rs4.3 billion a year for each rupee of depreciation, or Rs0.033 per kWh. The ratio of the two percentages suggests that roughly three-fifths of the capacity bill moves with the exchange rate within the year. The worst-case scenarios may also change other inputs, so that ratio is an approximation.
The base case assumes KIBOR of 11.7%, three-month SOFR of 3.98%, Pakistani inflation of 8.2% and US inflation of 2.1%. Capacity costs in rupees still fall slightly from the 2026 approval. The filing gives capacity charges only as monthly totals, with no breakdown by plant, so the reasons for the decline cannot be read from it.
What lower demand does
The demand sensitivity shows most clearly what a mostly fixed cost base means. It assumes growth of 0.7% rather than 2.6%. CPPA-G links the lower figure to continued fuel-related load management, which it estimates removed about 1,254 GWh of supply between March and August 2026. Sales fall by 2,144 GWh to 127,937 GWh, but total cost falls by only Rs25.4 billion. Each kWh not sold therefore saves about Rs11.85 of cost, mostly fuel, while it would have paid Rs27.31 at the base-case price. The difference, Rs15.46 per unit or about Rs33.1 billion in total, is recovered from the 127,937 GWh that are still sold. That raises the price to Rs27.568.
The same arithmetic applies when demand moves to rooftop solar. In its cover letter, CPPA-G says it is still waiting for the distribution companies to send data on net metering, net billing, and small and captive power plants. It will forward the data to NEPRA when it arrives. The 2027 sales forecast has been filed without it.
Against this year's actual fuel costs
Actual fuel costs this year make the base-case fuel figure look less extreme. For September 2026, CPPA-G reported an actual fuel cost of Rs10.0220 per kWh, against a reference of Rs7.4596, and has requested a fuel charge adjustment of Rs2.5624 per unit, which NEPRA will hear on 29 October. The proposed fuel reference for September 2027 is Rs9.404. Measured against that, the September 2026 outcome would still have produced an upward adjustment of about Rs0.62 per unit. The 2026 references were set before the oil price rise, and the 2027 base case assumes Brent stays close to its summer average.
The ideal case, with Brent at US$70, still comes to Rs25.883, 2.2% above the 2026 reference. Its fuel cost of Rs8.714 is nearly a rupee above this year's Rs7.738, and it uses the same higher variable O&M as the base case. None of the six scenarios in the filing returns the price to the 2026 level.
NEPRA has two related decisions to make at the hearing. The first is which oil price to adopt. The second is CPPA-G's suggestion that, given the volatility, the references be updated periodically during the year. Monthly fuel charge adjustments already correct the reference, but only after the costs have been incurred. A reference closer to actual costs would make those adjustments smaller, and the September example shows how large they have been this year.
The demand forecast is a separate question. CPPA-G's 2.6% base case assumes no fuel-related load management in 2027, and it presents the 0.7% case as the outcome if current fuel constraints continue. The choice between the two moves the reference by Rs0.259 per unit.