By Staff Reporter
ISLAMABAD: Pakistan’s power regulator raised a special electricity rate meant to revive industrial demand to 25.30 rupees per unit from 22.98 on the chairman’s casting vote, after a 2-2 split in which the members in charge of tariffs and development called for the scheme to be suspended instead.
The National Electric Power Regulatory Authority, Nepra, also allowed distribution companies on Friday to add 2.37 rupees per unit to all consumers’ November bills through the monthly fuel cost adjustment, recovering an additional 25 billion rupees. The decisions, which industry opposed, are likely to raise costs for customers across the country, including those of K-Electric Ltd. and the other distributors.
Chairman Waseem Mukhtar and the authority’s law member backed the higher rate. Amina Ahmed, the member for tariffs, and Maqsood Anwar, the member for development, opposed it. Mukhtar then used a second, casting vote under the Nepra Act to break the deadlock, even though he had endorsed the dissenters’ written arguments in full.
The dispute centres on the incremental support package, a three-year scheme approved in December 2025 that lets industry pay a flat rate for consumption above previous levels. The rate was set at 22.98 rupees, down from 34 rupees for factories and 38 rupees for farms. The Power Division said industrial demand had contracted by 14% and agricultural demand by 47%, partly because consumers had adopted alternative supply. The scheme was designed to be subsidy-neutral, but subject to positive fuel cost adjustments.
Industrialists have been protesting since May, seeking suspension on the grounds that the package failed to benefit them and raised their bills. The package was due for review after its first six months, in June. The Power Division submitted its request late, despite repeated reminders from the regulator.
Nepra had been signalling impatience for months. In August, the regulator warned the Power Division it would not accept a revised package unless industry was consulted, and industrial representatives told the same hearing that the scheme had not helped most factories and had gone unreviewed for nine months. At an Oct. 5 hearing, the ministry sought a review, arguing that marginal costs had exceeded the rate for several months. That sat awkwardly with what agencies under the ministry told Nepra in August, when the Central Power Purchasing Agency and the Power Planning and Monitoring Company said marginal cost had not topped the rate since April.
In their joint dissent, Ahmed and Anwar said even the revised 25.30 rupees was a “random number” with no evidence behind it. Nepra’s own institutional calculations put the marginal cost of incremental supply at 31.83 rupees per unit, they said. They noted that the ministry’s figure rests on the generation mix assumed when the package was designed, updated only for fuel prices.
The two members said a rate below the true cost leaves other consumers to cover the gap in two ways. Extra consumption under the package raises the system’s average fuel cost, which is recovered from everyone through the fuel adjustment. And because incremental units are excluded from quarterly tariff adjustments, the adjustment borne by consumers outside the scheme rises. Cabinet’s decision and Nepra’s own directives required the existing rate to be reassessed and then retained, revised or suspended, they said, and that exercise was never done.
“Other consumers should not be made to bear the cost of a review that the Ministry of Energy was required to submit five months ago but had yet to provide,” was the substance of their objection, and they asked how a package built on cost-reflectivity could continue without a validated cost-reflective rate.
Mukhtar said the dissenters’ conclusions “need serious consideration” but that suspending the package now would not be appropriate. He argued the ministry should get another chance to supply the information the regulator has repeatedly requested, including in the latest determination. In the order, he said he was exercising his casting vote in favour of the first opinion, which becomes the authority’s order.
All four members agreed the Power Division was required to submit revised calculations six months ago and had not, and that it had not adequately answered the regulator’s questions. They said neither the Independent System and Market Operator nor the Power Planning and Monitoring Company, both duty-bound to do so, had supplied the marginal price in proper form. The members called the package a flagship project of the ministry and pointed to a lack of coordination among the entities that work under it.
The determination sets deadlines for the agencies to provide the missing data. The members warned that missing them could bring an adverse outcome in the review, including suspension or termination of the package, and that any entity failing to comply faces legal proceedings.
The fuel adjustment adds to a run of increases tied to costlier imported fuel. Consumers are already paying a 2.0581 rupee adjustment for July. At an August hearing, CPPA officials attributed a large part of that rise to record spot purchases of liquefied natural gas after Qatari contract cargoes were disrupted by the closure of the Strait of Hormuz. For September, the purchasing agency sought 2.5624 rupees per unit, or about 32.7 billion rupees, with actual fuel costs averaging 10.02 rupees per unit against a reference of 7.46 rupees. Nepra reserved its decision after a hearing on Oct. 29.
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