Power tariff stays high on rise in capacity payments.

Power tariff in Pakistan has remained exorbitantly high despite pulling the plugs on plants producing expensive electricity and going for cheaper supplies over the past five years.

The major reason behind the high tariff has been a sharp increase in capacity payments to power houses in case they were not asked to add power to the national grid, according to the State Bank of Pakistan's (SBP) Third Quarterly Report on The State of Pakistan's Economy.

"In absolute terms, capacity payments are estimated to be around Rs664 billion for FY19, representing an increase of around 60percent over the preceding year," the SBP stated in the report issued earlier this week.

The rise partially stemmed from an increase of approximately 729-megawatt capacity to the system during the year, modest growth in power supply, increase in payment of net hydel profit (NHP) to provincial governments and associated arrears, the central bank said.

The country has gradually reduced reliance on plants running on the most expensive fuel- furnace oil - and has set up new power projects on cheaper fuels like gas/re-gasified liquefied natural gas (RLNG), coal, nuclear, hydel, wind and solar.

The central bank maintained that the power generation sector in Pakistan had undergone significant change over the last five years. Overall electricity generation capacity has increased over 40percent since June 2013, with a visible shift in fuel composition towards...