ISLAMABAD: The federal government has indicated that it is preparing a new electricity tariff package in response to declining power demand, while simultaneously seeking approval for an additional Rs1.20 per unit Fuel Cost Adjustment (FCA) to recover Rs15.7 billion from consumers through August electricity bills.
During a public hearing held by the National Electric Power Regulatory Authority (NEPRA), officials revealed that electricity demand continued to weaken, with power consumption in June 2026 declining by 3.3% year-on-year. Total electricity sales fell to 9.995 billion units, compared to 10.337 billion units in June 2025.
Government representatives attributed the decline to multiple factors, including the rapid expansion of solar net metering, the solarization of agricultural tube wells in Balochistan, changing weather conditions, and evolving consumer usage patterns. While industrial electricity consumption increased by 2.8%, demand from domestic, commercial, agricultural, and bulk consumers declined significantly.
Officials also explained that the unavailability of contracted LNG cargoes from Qatar forced Pakistan to procure expensive spot LNG and make limited use of furnace oil-fired generation, resulting in higher fuel costs.
New Tariff Package Under Consideration
Power Division officials informed NEPRA that work is underway on a comprehensive electricity tariff package aimed at modernizing the pricing structure.
The proposed reforms are expected to include:
- Revision of Time-of-Use (ToU) tariffs.
- New framework for Captive Power Plants (CPPs).
- Integration of Battery Energy Storage Systems (BESS).
Power Division official Naveed Qaiser said battery storage could improve grid stability and optimize electricity consumption, although utility-scale battery deployment may slightly increase overall tariffs due to associated investment costs. He added that the package is still under development and will be submitted to NEPRA after finalization.
NEPRA Criticizes Loadshedding Despite Lower Demand
During the hearing, NEPRA Member Development Maqsood Anwar Khan questioned why consumers continued to face extensive loadshedding despite declining electricity demand.
He criticized both commercial and revenue-based loadshedding, arguing that distribution companies had reduced technical losses by shutting down feeders and transformers instead of improving governance and eliminating electricity theft.
“The improvement should come through effective field operations against illegal connections rather than leaving consumers without electricity during extreme summer temperatures,” he remarked.
Distribution companies acknowledged that scheduled loadshedding continued for four days during June, ranging between 93 MW and 730 MW, while revenue-based outages remained widespread.
Industrial Sector Raises Concerns
Industrial representatives from Karachi urged the government to review its incremental industrial tariff package, claiming its financial impact may be shifting costs to domestic consumers.
Officials responded that the incentive package has completed its initial six-month period and is currently under review by NEPRA for possible adjustments.
Industrial stakeholders also expressed concern after officials disclosed temporary technical issues affecting three nuclear power plants—one in Karachi and two at Chashma. However, government representatives clarified that the overall availability of the country’s nuclear fleet remained around 94%, well within contractual performance limits.
Industry participants further criticized increased reliance on costly RLNG and furnace oil generation, as well as delays in bringing lower-cost hydropower projects online.
Rs1.20 Per Unit FCA Proposed
The Central Power Purchasing Agency (CPPA) reported that the reference fuel cost for June 2026 had been set at Rs7.714 per unit, while the actual generation cost reached approximately Rs8.90 per unit.
Consequently, CPPA has requested an increase of Rs1.20 per unit under the monthly Fuel Cost Adjustment mechanism.
Power Division officials explained that consumers would effectively experience a net increase of around 86 paisa per unit in August bills, as an existing FCA of 34 paisa per unit expires and would be replaced by the new adjustment, subject to NEPRA’s approval.
Story by Khaleeq Kiani
