By Staff Reporter
ISLAMABAD: National Electric Power Regulatory Authority notified a higher rate of 25.30 rupees per unit for the discounted electricity package offered to industrial and agricultural users, keeping the scheme alive on the chairman’s casting vote after two of the four members called for it to be suspended.
The rate replaces the 22.98 rupees per unit set in December, and it applies to consumption above a customer’s baseline. The regulator, known as Nepra, published the order in the Gazette of Pakistan on Thursday. The decision itself is dated Nov. 6, when the authority split 2-2 on the incremental consumption package, or ICP. Chairman Waseem Mukhtar broke the tie. The notification includes the dissenting notes of Amina Ahmed and Maqsood Anwar Khan, along with Mukhtar’s own additional note.
The outcome is likely to raise costs for other electricity users, including customers of K-Electric and the state-owned distribution companies, according to the dissenting members. Industrial groups have also objected. They say the new rate sits well below what it costs to supply the extra power, and that the shortfall ends up in monthly fuel cost adjustments paid by everyone else.
Nepra’s own staff put the marginal cost of the additional electricity at 31.83 rupees per unit, later trimmed to 29.65 rupees after operational data from the market operator was factored in. Even the lower figure is about 17% above the new rate. Monthly estimates in the review ran far higher in some periods, including 42.01 rupees in April and 49.65 rupees in May.
Ahmed, who oversees tariff and finance, and Khan, who oversees development, called the 25.30 rupee figure a “random number” unsupported by evidence. They said it was derived by updating fuel prices in the generation mix assumed when the package was designed. They urged the regulator to suspend the scheme until verifiable data became available.
The dissenters said consumers outside the scheme were being hit twice. Extra consumption raises the system’s average fuel cost, which is recovered from all users through the fuel cost adjustment. Separately, because the additional units are excluded from quarterly tariff adjustments, the share paid by everyone else rises. They also said other consumers should not carry the cost of a review the Ministry of Energy was due to submit five months ago and has not.
Mukhtar fully endorsed the written arguments of the dissenting members and said their conclusions “need serious consideration.” He nonetheless cast the deciding vote to continue the package. He said suspension at this stage would not be appropriate and that the ministry should get another chance to provide the information the regulator has repeatedly requested. The rate is provisional and subject to review, and the order takes effect from November billing. Nepra rejected the Power Division’s request to apply the increase from October, since most billing for that month was already complete.
All four members agreed that the Power Division was required to submit revised calculations six months ago and failed to do so despite repeated reminders. They also faulted the Independent System and Market Operator and the Power Planning and Monitoring Company for not supplying the marginal price in proper form, though both were duty-bound to do so. The members said the lack of coordination among agencies under the ministry needs attention, given that the package is one of its flagship initiatives.
The order sets deadlines for the data. Available information and analysis are due by Nov. 25, with figures for Nov. 16-30 due by Dec. 3. The members warned that missing them could lead to suspension or termination of the program, and that any entity that fails to comply will face legal proceedings. Under the original approval, the package is to be terminated immediately if two consecutive reviews find that the tariff needs to rise.
The regulator also asked the Power Division to find a way to identify customers with furnace oil-fired captive generation and to act where misuse of the scheme is confirmed.
Mukhtar described the casting vote as his second vote under the Nepra Act, in favor of the first opinion. That broke the deadlock and made the first opinion the order of the authority.
The Power Division has pushed back on reports characterizing the move as an industrial tariff increase. A spokesman said 25.30 rupees is the revised marginal rate under the package and not the industrial tariff, and that regular tariffs for industrial and agricultural users are unchanged. He said the average industrial rate was 34.40 rupees per kilowatt-hour in October, excluding taxes, and that the industrial tariff is down about 18.94 rupees per unit, including taxes, from March 2024. The division attributed the higher marginal cost to rising generation costs linked to the prevailing war situation.
The division has also said the package covered 6,940 gigawatt-hours of incremental consumption from December 2025 through September 2026. It said industrial users got discounts of 5 to 10 rupees per unit on that extra usage, cutting their overall bills by an average of 1.5 to 2.5 rupees per unit.
The SITE Association of Industry in Karachi has urged Nepra to suspend the package. If the scheme continues, the group wants the revised marginal cost applied to all incremental consumption from June 9. It also wants the difference recovered from beneficiaries and credited to other consumers through future adjustments.
The three-year package, approved by Nepra on Dec. 9 and notified the next day, was meant to revive demand. It offered eligible industrial and private agricultural customers a flat rate on usage above their consumption in the December 2023 to November 2024 reference period. That rate was set against base tariffs of roughly 34 rupees for industry and 38 rupees for agriculture. The approval required a review every six months. The Power Division’s first submission, in late July, was returned by Nepra in September for lacking the required cost assessment. A public hearing followed on Oct. 5.
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