NEPRA mulls Rs1.80/unit power tariff cut

Capacity payments drop by Rs53.714b; circular debt also cut by Rs780b on power sector reforms

ISLAMABAD:

The National Electric Power Regulatory Authority (NEPRA) has indicated a possible reduction of Rs1.80 per unit in electricity prices under the Quarterly Tariff Adjustment (QTA) for the quarter ending June 2025.

The proposed relief, if approved, could provide consumers across Pakistan with financial relief amounting to Rs53.393 billion.

The proposal was discussed during a public hearing held at NEPRA headquarters on Monday, where representatives from the Central Power Purchasing Agency (CPPA-G), distribution companies (DISCOs), business community, media, and general consumers presented their views. The request was submitted by CPPA-G on behalf of ex-WAPDA DISCOs to refund the surplus funds under QTA for the April-June 2025 quarter.

NEPRA was informed that the main driver of the proposed relief is a significant decrease in capacity payments by Rs53.714 billion. Additionally, improved efficiency in transmission and distribution (T&D) led to a further reduction of Rs662 million. However, these savings were partially offset by slight increases in Operation & Maintenance (O&M) costs and Use of System Charges and Market Operation Fees (UoSC & MoF), which went up by Rs182 million and Rs804 million respectively.

During the proceedings, NEPRA officials were also briefed on the status of the power sector's circular debt. According to Power Division officials, the circular debt has declined by Rs780 billion over the past fiscal year, falling from Rs2,300 billion to Rs1,600 billion. This improvement was attributed to better DISCO performance, which contributed to Rs200 billion in savings. However, the closure of the Neelum-Jhelum Hydropower Plant adversely impacted the sector by Rs18 billion.

Officials highlighted that electricity consumption among DISCOs increased by an average of 31%, with the exception of Quetta Electric Supply Company (QESCO), which reported a decline in sales. NEPRA officials raised concerns over the reported growth in industrial consumption, but none of the DISCOs' CEOs could provide satisfactory explanations.

The government, officials said, is currently working on reforms to both direct and cross subsidies. They also clarified that the Rs1,275 billion raised through bank loans to manage power sector liabilities would not require any separate surcharge for repayment.

If NEPRA approves the proposed adjustment, the relief will be applicable to all DISCO consumers, including those served by K-Electric, except lifeline users, prepaid meter holders, and electric vehicle (EV) charging stations. This aligns with the federal government's policy of maintaining a uniform power tariff nationwide.

Among the DISCOs, Faisalabad Electric Supply Company (FESCO), Lahore Electric Supply Company (LESCO), and Multan Electric Power Company (MEPCO) requested the highest refunds at Rs15.03 billion, Rs12.64 billion, and Rs8.47 billion, respectively. In contrast, QESCO sought a positive adjustment of Rs3.594 billion due to higher capacity payments and operational costs, reducing the total refund amount from Rs56.987 billion to Rs53.393 billion.

For context, NEPRA had allowed a recovery of Rs1.7432 per unit, or Rs43.23 billion, in QTA during the same quarter of FY2023-24. NEPRA stated that a final decision will be issued after further scrutiny of the data submitted.

If approved, the adjustment would provide much-needed relief to consumers struggling with high inflation and increased cost of living.