Rs6-per-unit tariff shock averted

The government on Monday claimed to have rescued consumers from up to Rs6-per-unit electricity tariff hike following timely interventions to arrange liquefied natural gas (LNG) supplies.

It projected that consumers may instead receive a nominal relief of 20 paisa per unit in June bills against the anticipated tariff increase due to a hike in fuel prices and shortage of LNG for power generation.

Pakistan arranged LNG cargoes through spot market and the resumption of LNG shipments from Qatar on a contract basis.

"Owing to timely state interventions, astute policy decisions and moderate load management, the federal government has shielded electricity consumers from a projected tariff hike of Rs5-6 per unit for the billing month of June 2026," said the Power Division in a statement.

Despite an acute shortage of re-gasified LNG (RLNG), triggered by the regional conflict (the US-Iran war), an unprecedented surge in international fuel prices and the forced generation of electricity using expensive fuel oil, the government's policy continuity and rigorous mitigation measures would prevent any upward revision in June's electricity bills, it said. On the contrary, "consumers are projected to receive a nominal relief of up to 20 paisa per unit."

RLNG plays a pivotal role in Pakistan's power generation infrastructure. In the reference tariff, the price of RLNG was projected against the Brent crude price of $70 per barrel; however, in April 2026, Brent surged to $120 per barrel. "Under ordinary circumstances, such a spike would have automatically translated into an FPA (fuel price adjustment) of Rs5-6 per unit," elaborated the Power Division. "Nevertheless, through crisis management, the government mitigated the acute surge in Brent prices and the unavailability of RLNG."

The division emphasised that it was achieved by allocating additional domestic gas supplies, optimising power generation through furnace oil and imported coal-fired power plants, and enforcing balanced load management. Consequently, the actual fuel adjustment for April 2026 was tightly contained at a mere Rs1.73 per unit.

Details revealed that optimum administrative oversight and structural policy interventions, which led to a reduction in transmission and distribution losses alongside other sectoral reforms, yielded positive outcomes. Consequently, under the quarterly tariff adjustment (QTA) for the first quarter of the current year, a tariff reduction of Rs1.93 per unit has been approved for the next three months, translating into a collective financial cushion of Rs65 billion.

Simultaneously, timely executive decisions minimised the projected monthly FPA for April 2026, initially estimated at Rs5-6 per unit, constraining the actual net increase to just Rs1.73 per unit.

The negative quarterly adjustment and the positive monthly fuel adjustment will effectively neutralise each other's financial impact, opening up a projected window of relief of up to 20 paisa for consumers. Consequently, the per-unit tariff for June 2026 will remain unchanged when compared with the January-May 2026 baseline.

Through this robust strategy, according to the Power Division, the government thwarted an escalation of Rs5-6 per unit in fuel adjustment, thereby preventing an additional burden of approximately Rs38 billion from being passed on to consumers for April alone.

During the first quarter of 2026 (January-March), a negative financial impact of Rs65 billion was recorded under the quarterly adjustment mechanism, passing on a relief of Rs1.93 per unit to consumers. Conversely, a positive financial impact of Rs19 billion was logged under fuel adjustment for April. This has resulted in a net negative variance of Rs46 billion against the projected base tariff for consumers.

"The reduction in the quarterly adjustment is primarily attributed to an increase in national power demand, improved line loss mitigation, price stabilisation and enhanced electricity consumption driven by incremental tariff packages," said the Power Division.

When the National Electric Power Regulatory Authority (Nepra) originally determined the base tariff, the federal government notified it after incorporating state subsidies. These tariff estimates were originally benchmarked against projected fuel costs, currency exchange rates, demand patterns and the generation mix.

However, the eruption of regional conflict drastically altered the operational landscape. International fuel prices skyrocketed, supply chains faced severe disruptions and the national generation mix was abruptly modified.