NEPRA okays Rs3.28 tariff hike

Raise will put additional Rs135.5b financial burden on power consumers

ISLAMABAD:

In another shock to the already overburdened power consumers, the National Electric Power Regulatory Authority (NEPRA) has notified a hike of Rs3.28 per unit in the price of electricity as part of the quarterly adjustments.

Earlier, Nepra approved an increase in electricity rates in Pakistan, resulting in an additional financial burden of Rs135.5 billion on the power consumers.

This rate hike is part of the quarterly adjustments in electricity prices.

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Previously, the consumers were paying an extra Rs1.25 per unit due to the ongoing quarterly adjustments, which were expected to end in September.

Of the total increase, the extra Rs1.25 per unit will continue, while an additional Rs2.03 per unit will be imposed for the next six months.

Nepra took the decision, citing a positive adjustment of Rs135,584 million.

This increase is attributed to various factors, including capacity charges, variable O&M, additional recovery on incremental sales, use of system charges, Market Operator Fee, and the FCA impact on T&D losses for the fourth quarter of fiscal year 2022-23.

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Originally, the energy ministry had requested a tariff increase of Rs5.40 per unit, recoverable from consumers over three months.

However, to avoid political backlash and consumer protests, the Power Division asked for a more gradual increase of Rs3.55 per unit – spread over six months.

Further, Nepra had suggested that the government might consider maintaining a uniform consumer-end tariff for K-Electric (KE) and state-owned distribution companies even after privatisation, possibly through subsidies.

This aligns with Nepra's policy guidelines, ensuring uniform tariff policies for a specified period.

As a result, the KE consumers will be charged at a rate of Rs3.2814 per kWh, recoverable over the same six-month period from Oct 2023 to March 2024.

Notably, no quarterly adjustments will be applied to certain industrial consumers as per a prior Nepra decision.

The tariff increase will affect residential and commercial consumers differently, based on their usage and load.

For households, the "life Line" category (up to 50 or 51-100 units) remains unchanged, but those consuming more units will face varying tariff increases. Commercial consumers will also experience a uniform rate increase.

Nepra has sent the decision of hike in the electricity prices to the government for intimation and to be published in the gazette of Pakistan.

This adjustment falls under the quarterly tariff adjustment (QTA) and is aimed at covering the additional expenses resulting from currency devaluation, interest rate hikes, and related factors.

The power regulator had also recommended that the government considered maintaining a uniform consumer-end tariff for the KE and state-owned distribution companies, even after privatisation, potentially through direct or indirect subsidies.

Consequently, the KE consumers will be billed at a rate of Rs3.2814 per kWh, with recovery taking place over the same six-month period from Oct 2023 to March 2024.