KARACHI: Central Power Purchasing Agency (CPPA) spent more than three times its approved legal budget last year, even after shedding dozens of staff in a restructuring that handed control of electricity market operations to a newly created entity.
The disclosure surfaced in a National Electric Power Regulatory Authority (NEPRA) determination issued Monday setting the operating fee for the Central Power Purchasing Agency (Guarantee) Limited, or CPPA-G, for the 2025-26 fiscal year.
The regulator set CPPA-G's fee for the coming year at Rs10.52 per kilowatt per month, below the Rs14.67 the agency had requested, after also trimming bonus payments, rejecting several outsourced consulting contracts and disallowing a planned corporate social responsibility budget.
Buried in the agency's reconciliation of prior-year spending was a single line item that dwarfed nearly every other adjustment: legal charges of Rs1.275 billion against an approved budget of just Rs400 million, an overrun of Rs875 million, or roughly 219%.
NEPRA's order does not detail what drove the legal spending spike, but it directed CPPA-G going forward to bill its legal fees directly to distribution companies as part of regular capacity charges, rather than folding them into its annual fee request.
"This structural change suggests the regulator wants closer, more frequent scrutiny of the agency's legal costs rather than reviewing them only once a year after the fact," an official said.
The legal overrun stood out against a broader reconciliation in which most of CPPA-G's other cost categories ran under budget. The agency actually spent Rs144 million less than approved on general establishment costs and Rs14 million less on repair, maintenance and IT services, according to the filing.
Net of the legal overrun and other adjustments, NEPRA ultimately credited the agency with Rs1.12 billion in prior-year adjustments well below the Rs1.78 billion CPPA-G had pressed for during a December public hearing.
The legal cost surge came during a year of significant upheaval inside the agency. CPPA-G transferred 20 employees from its Market Operations department to a newly formed Independent System & Market Operator (ISMO) as of April 30, 2025, under a business transfer agreement that also moved CPPA-G's market operator license to the new entity.
Separately, 26 employees resigned during the same fiscal year. The combined departures drove down CPPA-G's salary costs even as the agency simultaneously sought approval to fill 75 vacant positions, 27 to replace departed staff, 20 in newly identified roles and 28 in its information technology department alone.
NEPRA's also noted an active legal dispute with an independent power producer. As part of new quarterly reporting requirements, CPPA-G disclosed a capacity-charges arbitration with Orient Power, initiated June 6, 2018, and pending before the Court of International Arbitration in London, involving a Rs100 million claim and Rs10 million in associated legal fees.
NEPRA directed CPPA-G to begin reporting the status of that case and any other litigation, including international arbitrations, on a recurring basis, a transparency requirement that wasn't previously in place.
But the unexplained scale of last year's legal spending, nearly matching the agency's entire approved general establishment budget for new hires, leaves an open question heading into CPPA-G's next tariff filing, which NEPRA has ordered the agency to submit "immediately" under a new multi-year tariff framework.
