By Staff Reporter
ISLAMABAD: The government has moved to reduce electricity prices for consumers nationwide starting July 1, filing a petition with the National Electric Power Regulatory Authority (Nepra) for a Rs1.15 per unit tariff reduction.
The proposed cut, applicable to all but lifeline domestic consumers, aims to lighten the load on households and businesses amid economic pressures.
The petition keeps rates steady for lifeline domestic consumers, with those using up to 50 units per month paying Rs3.95 per unit and those in the 50 to 100 units range paying Rs7.74 per unit. The Power Division has advised against altering these slabs, noting they are already over-subsidised.
For all other consumers, a flat Rs1.15 per unit reduction is proposed for fiscal year 2025-26, delivering relief ranging from 3 percent to 10 percent depending on current rates.
All protected consumers using 1 to 100 units will see their rate drop 9.8 percent to Rs10.54 per unit from Rs11.69, while those in the 101 to 200 units slab will pay Rs13.01 per unit instead of Rs14.16, an 8 percent reduction.
Non-protected consumers exceeding 200 units will be charged Rs23.44 per unit for the first 100 units, down nearly 5 percent from Rs23.59. Other categories, including commercial, industrial, agricultural, and bulk consumers, will see reductions of 3 percent to 4 percent, all at the flat Rs1.15 per unit cut. The average rate is set to fall to about Rs31.60 per unit from Rs32.75 currently.
The tariff adjustments align with a 12.9 percent reduction in subsidy allocations in the federal budget, dropping to Rs1.04 trillion for FY2025-26 from Rs1.19 trillion in FY2024-25. This includes a 10 percent cut in the inter-Disco tariff differential subsidy (TDS) to Rs249.14 billion from Rs276 billion.
Balochistan tubewells will receive Rs4 billion, down from Rs9.5 billion; merged districts of Khyber Pakhtunkhwa and former Fata will get Rs40 billion, a 38 percent reduction from Rs65 billion; K-Electric’s subsidy falls 28 percent to Rs125 billion from Rs174 billion; and TDS for Azad Jammu and Kashmir drops 31.5 percent to Rs74 billion from Rs108 billion. The tribal region’s TDS is cut 39 percent to Rs40 billion from Rs65 billion, while the Pakistan Energy Resolving Fund subsidy holds steady at Rs48 billion. A general subsidy of Rs400 billion, slightly up from Rs394 billion, has also been allocated.
These rates reflect Nepra’s tariff determinations for distribution companies, factoring in revenue requirements, aggregate power purchase prices for FY2025-26, and reduced subsidies under an International Monetary Fund (IMF) agreement.
Nepra set a national average tariff of Rs34 per unit for FY2025-26, down from Rs35.50 per unit this year.
The Power Division said its petition adheres to the National Electricity Policy, 2021, which states under Clause 5.6.1 that the “financial sustainability of the sector is premised on the recovery of full cost of service, to the extent feasible, through an efficient tariff structure, which ensures sufficient liquidity in the sector.”
It added that the proposed tariff balances Nepra-determined rates, socio-economic objectives, and budgetary targets.
Nepra has scheduled a public hearing on July 1 to finalise the revised tariff. The Power Division submitted the uniform tariff proposal to the federal cabinet on June 28, expecting approval without changes. The latest uniform tariff for distribution companies was determined by Nepra on July 13, 2024, and notified on July 14.
The division noted that the tariff reflects the government’s economic and social policy, based on Nepra’s consolidated revenue requirements. The government plans to maintain a uniform consumer-end tariff for both K-Electric and distribution companies, even post-privatisation, through direct or indirect subsidies.
For K-Electric, the applicable uniform variable charge will be adjusted to recover its revenue requirements as determined by Nepra, accounting for targeted and cross subsidies.
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