The National Electric Power Regulatory Authority has conditionally approved Pakistan’s Integrated System Plan 2025, setting out nearly $58 billion in power generation and transmission investment over the next 11 years.
The plan covers the period from 2025 to 2035.
It outlines major additions to electricity generation capacity, new transmission infrastructure, renewable energy projects and improvements to the national grid.
However, Nepra’s approval came with significant reservations.
All three members of the authority, including the chairman, recorded separate observations, advisory notes or dissenting views covering more than 12 pages of the 45-page determination.
Their concerns focused on the inclusion and exclusion of major projects, the reliability of planning data and changes introduced without returning to the Council of Common Interests.
The CCI is the constitutional forum responsible for important matters involving federal and provincial interests, including national energy policy.
Nepra formally approved the revised base and recommended case of the Indicative Generation Capacity Expansion Plan 2025.
However, the regulator excluded the proposed Battery Energy Storage System and a K-Electric transmission line planned for 2028 from the approved base case.
The revised Transmission System Expansion Plan was also approved, subject to the resolution of Nepra’s observations.
$47 Billion Planned for New Generation Capacity
The Integrated System Plan examines Pakistan’s future electricity requirements under three economic growth scenarios.
These include high-growth, medium-growth and low-growth projections.
The high-growth scenario assumes average cumulative GDP growth of 6.37 percent.
The medium-growth scenario assumes average growth of 4.95 percent.
The low-growth scenario is based on average GDP growth of 3.52 percent.
The low-growth scenario was ultimately adopted as the reference or business-as-usual case for generation planning.
The selected model is based on the Rationalized Capacity Addition assumption.
Under this scenario, Pakistan is expected to add 26,045 megawatts of electricity generation capacity through 2035.
Of this amount, 17,485MW consists of committed projects that are already planned or progressing.
Another 8,560MW would come from optimized capacity additions identified through the planning process.
At the same time, around 2,577MW of existing generation capacity is expected to be retired.
These changes would take Pakistan’s total installed electricity generation capacity to approximately 62,657MW by the end of the planning period.
The projection also includes around 8,120MW of net-metering capacity.
Net metering has become an increasingly important part of Pakistan’s electricity system as households and businesses install rooftop solar systems.
The estimated cost of the additional generation capacity under the plan is approximately $47.08 billion.
This represents the largest component of the overall investment programme.
Transmission Network Requires Another $10.65 Billion
The generation expansion will require major investment in Pakistan’s electricity transmission system.
Existing and already committed transmission projects are expected to require around $4.6 billion.
New transmission expansion schemes will require an additional estimated $6.05 billion.
The total projected transmission investment therefore reaches approximately $10.65 billion through 2035.
Combined with the planned generation investments, the overall programme is valued at close to $58 billion.
The transmission programme includes infrastructure needed to carry electricity from new power plants to consumers.
Projects include new power evacuation systems, grid reinforcements and additional extra-high-voltage substations.
The plan also provides for transformer upgrades and additional voltage-control facilities.
These investments are intended to improve the reliability and stability of Pakistan’s power grid.
Transmission constraints have historically prevented electricity from being transferred efficiently between generation centres and areas of high demand.
Large power projects can provide little benefit if the grid does not have sufficient capacity to evacuate and distribute the electricity they produce.
Nepra has therefore linked generation expansion with corresponding transmission upgrades.
Nepra Raises Concerns Over CCI Being Bypassed
Despite granting approval, Nepra raised serious procedural concerns about how changes were made to the long-term electricity plan.
The regulator questioned recommendations made by a technical committee established by the Power Division.
Nepra said major changes affecting the National Electricity Policy or National Electricity Plan could not simply be dictated by a technical committee or the Power Division.
Such changes may require consideration by the Council of Common Interests.
The regulator questioned why important project decisions had been changed without returning to the constitutional forum.
Nepra also recorded differing positions presented by two organisations operating under the Power Division.
These were the Independent System and Market Operator and the Power Planning and Monitoring Company.
The regulator highlighted inconsistencies between their submissions on several important issues.
The Integrated System Plan 2025 replaces earlier Indicative Generation Capacity Expansion Plans and creates a combined framework for future generation and transmission planning.
Nepra’s official records show the ISP 2025-35 was submitted by the Independent System and Market Operator alongside separate generation and transmission expansion documents.
$900 Million Battery Storage Proposal Not Approved
One major proposal that did not receive immediate approval involved Battery Energy Storage Systems.
The proposed investment was estimated at around $900 million.
Nepra refused to approve the battery storage component without additional technical and economic analysis.
The regulator said authorities must first establish whether the proposed storage systems are genuinely required.
It also wants clarity on the optimal amount of battery capacity.
The operational role of the systems must also be defined.
Nepra further demanded a detailed assessment of whether the proposed investment would be cost-effective.
Battery storage can play an important role in electricity networks with growing levels of solar and wind generation.
Batteries can store excess electricity when renewable generation is high and release it when demand increases or generation falls.
However, large-scale battery systems can require substantial capital investment.
Nepra therefore wants stronger evidence that the proposed expenditure would deliver sufficient benefits to electricity consumers.
Until such a study is completed, the battery storage proposal will remain outside the approved base plan.
K-Electric Renewable Project Added After Initial Exclusion
Nepra also examined renewable energy projects connected to K-Electric.
The regulator noted that several highly competitive renewable projects associated with K-Electric had initially been excluded from the Integrated System Plan by ISMO.
However, a 269MW wind-solar hybrid project at Dhabeji was later included.
The project is expected to enter the system during the current fiscal year.
The JCM Wind-Solar Hybrid Project combines wind and solar generation.
Hybrid projects can help improve renewable energy availability because wind and solar output often peak at different times.
Nepra’s records show that an additional submission concerning the 269MW Dhabeji hybrid project was formally considered as part of the ISP process.
The regulator nevertheless questioned how projects were being selected, removed or added during the planning process.
Such decisions can have major implications for future electricity costs and energy security.
Gwadar to Get 40MW Local Power Plant
The plan also addresses electricity supply problems in Gwadar and the wider Makran region.
The area has historically relied heavily on imported electricity from neighbouring Iran.
Regional geopolitical tensions have increased the risks associated with depending on cross-border power supplies.
The Integrated System Plan therefore includes a 40MW on-site power generation project for Gwadar and Makran.
The project was added because extending Pakistan’s national electricity grid to the area is currently considered technically and economically difficult.
Nepra records show that a proposal for the 40MW Gwadar project was submitted as an addition to the Integrated System Plan along with a reliability assessment for the region.
The proposed plant would provide an alternative source of electricity if imports from Iran are disrupted.
Energy security in Gwadar has become particularly important because of the city’s strategic and economic significance.
Reliable electricity remains essential for port operations, businesses, households and future industrial development.
Regulator Questions Reliability of Planning Data
Another major concern involved the quality and reliability of the information used to prepare the plan.
Nepra expressed displeasure over a disclaimer provided by the Independent System and Market Operator.
According to the regulator, ISMO disclaimed responsibility for the integrity, accuracy, correctness, authenticity and completeness of some of the information and projections used in the plan.
Nepra questioned how an investment programme worth tens of billions of dollars could rely on information for which the planning organisation was unwilling to accept full responsibility.
Demand forecasts are particularly important.
If future electricity demand is overestimated, Pakistan could build unnecessary generation capacity.
That could increase capacity payments and electricity tariffs.
If demand is underestimated, the country could face shortages and inadequate infrastructure.
The regulator therefore stressed the importance of reliable forecasting and clear institutional accountability.
Consumer Electricity Tariff Could Reach Rs37.28 by 2035
Nepra also raised concerns about how the investment plan could affect electricity consumers.
The regulator highlighted contradictory positions from ISMO and the Power Planning and Monitoring Company regarding the expected tariff impact.
Nepra directed the relevant authorities to calculate the effect of the entire plan on consumer-end electricity tariffs.
The findings must then be incorporated into the main Integrated System Plan.
PPMC projected that the consumer-end base electricity tariff could rise to approximately Rs37.28 per unit by 2035.
The comparable base tariff for 2024-25 was around Rs34 per unit.
However, actual electricity bills paid by consumers can be considerably higher after taxes, surcharges, quarterly adjustments and other charges are added.
The tariff impact is therefore likely to remain one of the most closely watched aspects of the plan.
Pakistan’s power sector already faces major financial challenges.
These include circular debt, capacity payments, transmission losses, electricity theft and declining grid demand in some consumer categories.
Rapid growth in rooftop solar has also changed traditional electricity consumption patterns.
These factors make long-term demand forecasting increasingly complicated.
Nepra Gives Conditional Approval Rather Than Blank Cheque
The regulator’s final decision therefore represents approval with significant conditions rather than unconditional support for every component of the plan.
Nepra approved the revised generation and transmission framework but withheld approval for specific projects.
It demanded further examination of battery storage.
It questioned project selection procedures.
It raised constitutional concerns about the role of the Council of Common Interests.
It also sought greater accountability for the data used in preparing the plan.
The regulator wants the impact on consumer electricity prices to be clearly quantified.
These reservations are particularly important because the Integrated System Plan will influence power sector investment decisions for more than a decade.
Nearly $58 billion in projected investment could fundamentally reshape Pakistan’s electricity system.
The plan could bring new generation capacity, renewable energy, stronger transmission networks and greater system reliability.
However, poor planning could also create expensive projects that consumers would ultimately be required to finance through electricity tariffs.
Nepra’s conditional approval therefore places responsibility on the Power Division, ISMO and other sector institutions to resolve the regulator’s concerns before major investment decisions move forward.
The challenge will be ensuring that Pakistan builds enough generation and transmission capacity to meet future demand without repeating previous cycles of overcapacity, expensive contracts and rising consumer costs.
