Govt approves Rs7.5 base power tariff hike

NEPRA has rebased average tariff to make it uniform across country

Zafar Bhutta July 23, 2023


The government on Saturday filed a motion with the National Electric Power Regulatory Authority (Nepra) as well as power distribution companies (DISCOs) to decide the tariff for different categories of the customers based on their usage, a day after the federal cabinet gave the nod to a massive hike of Rs7.50 per unit.

The federal cabinet had approved the decision of the power regulator to increase the electricity rates by a uniform tariff for the consumers of K-Electric and DISCOs -- adding to the woes of the already inflation-hit citizens.

The power regulator has rebased the average tariff for a uniform one across the country. Now the government has filed a motion before the power regulator as well as the DISCOs to decide the tariff for different categories of customers based on their usage.

Under the slab system, the government in its motion has proposed a hike of Rs4 per unit for the consumers using 101-200 units.

This will take the tariff for this category of consumers from the existing Rs18.95 per unit to Rs22.95 per unit. For the consumers using 201-300 units, an increase of Rs5 per unit has been suggested. This will hike the existing rate of Rs22.14 per unit to Rs27.14 per unit for these consumers.

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For the consumers using 301-400 units, an increase of Rs6.5 per unit has been proposed. This will jack up the existing rate of Rs25.53 per unit to Rs32.03 per unit for the consumers falling in this category.

For the consumers using 401-500 units, 501-600 units and 601-700 units, the proposed hike in tariff is Rs7.50 per unit. This means that the rates for these consumers will increase from the existing Rs27.74 per unit to Rs35.24 per unit, Rs29.16 per unit to Rs36.66 per unit and Rs30.30 per unit to Rs37.80 per unit, respectively.

However, there will be no change for lifeline consumers.

The power regulator will hold a public hearing to consider the proposed changes in the electricity rates for different categories of consumers of K-Electric and other distribution companies.

The government recently implemented an increase in the average power tariff by Rs4.96 per unit for the financial year 2023-24.

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This adjustment placed an additional burden of Rs3.28 trillion on the power consumers throughout the ongoing financial year.

The tariff hike was seen as a fulfillment of the government’s commitment to the International Monetary Fund (IMF) to raise electricity rates.

Following this increase, the average national tariff increased from Rs24.82 per unit to Rs29.78 per unit.

“The revised national average tariff for the FY 2023-24 has been determined as Rs29.78 per kWh [kilowatt hour], which is Rs4.96 per kWh higher than the previously determined national average tariff of Rs24.82 per kWh,” Nepra noted in an earlier statement.

When the present coalition government came to power, it increased the base power tariff from Rs16.91 per unit to Rs24.82 per unit in July last year.

The increase of Rs7.91 per unit was aimed at recovering an additional Rs893.83 billion from the consumers during the fiscal year 2022-23.

The power regulator recently issued a decision to increase the national average tariff and sent it to the federal government.

Now, the federal government has submitted a motion to implement slabs on different categories of K-Electric and other Discos consumers.

The proposed changes for different categories will be implemented after the decision of the power regulator following a public hearing scheduled on Monday next week.

Analysts said the government had approved a 27% increase in the base tariff.

The tariff for industries was increased by 31% (Rs7.5 per unit).

They added that the tariff increase was a major blow to industries using a great deal of electricity including long steel manufacturers.

It might also affect the margins of some cement players, who rely on the national grid.

The analysts said this could roughly mean over a Rs50 per bag impact if the cement was produced using the national grid.

However, they continued that a company-wise impact would depend on the power mix.


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