NEPRA approves salary hike, bonuses

ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) has approved higher salaries, performance increments and bonuses for employees of the Central Power Purchasing Agency (Guarantee) Limited (CPPA-G) for the financial year 2025-26, despite ongoing concerns over inefficiencies and governance issues in Pakistan’s power sector.

In its decision on CPPA-G’s Market Operation Fee for FY2025-26, Nepra approved several key expenditure items while reducing or rejecting a number of proposed costs.

The agency had sought a market operation fee of Rs14.67 per kilowatt per month, including prior-year and miscellaneous adjustments, along with a net revenue requirement of Rs4.664 billion.

It also requested permission to recover legal expenses through periodic tariff adjustments and to actualise expenditures based on audited accounts.

For employee-related expenses, Nepra approved a 4.49% salary increase in line with the average Consumer Price Index (CPI) inflation, as well as performance-based increments averaging 6%. The combined increase approved by the regulator stands at 10.49%, slightly below the 11% requested by CPPA-G.

The regulator sanctioned salary expenditures amounting to Rs1.585 billion and approved employee benefits worth Rs249 million. While CPPA-G had sought Rs199 million, equivalent to one and a half gross salaries for employee bonuses, Nepra approved only one basic salary, amounting to Rs55.64 million.

CPPA-G’s proposal to recruit dozens of additional employees was only partially accepted. Nepra approved staffing costs of Rs109.71 million for 26 employees already hired and directed the company to seek separate approval for any future recruitment.

The regulator also reduced several operational expenditure requests. Of the Rs32 million sought for staff training, only Rs8.58 million was approved based on actual spending, noting that the market operator function has since shifted to the Independent System and Market Operator (ISMO).

Nepra rejected proposals for hiring headhunting firms, succession planning consultants and compensation survey consultants. However, it approved Rs1 million for testing services, Rs700,000 for a board evaluation consultant and Rs2 million for tax consultancy services.

Administrative expenses were reduced from the requested Rs316 million to Rs271.11 million, with cuts made to communication costs, board and audit fees, outsourced services and insurance.

The regulator also disallowed all environmental, social and governance (ESG) expenditures, stating such corporate social responsibility-related costs should not be passed on to electricity consumers.

Similarly, CPPA-G’s request of Rs241 million for repair, maintenance and IT services was trimmed to Rs137 million, mainly through reductions in IT, vehicle and maintenance expenses.

While several essential capital and operational expenditures were approved, Nepra significantly curtailed a number of the company’s proposed costs.