ISLAMABAD: Mounting challenges in Pakistan’s power sector have diluted the impact of a reduction in electricity tariffs, as the number of subsidised and low-income consumers has more than doubled to around 21 million over the past three years, effectively offsetting a 62-paisa per unit cut in the national average power rate effective January 1.
In an unprecedented move, the National Electric Power Regulatory Authority (Nepra) on Monday issued its determination on annual tariff rebasing just hours after holding a public hearing on the federal government’s request. The swift decision drew sharp criticism from business groups, including representatives of the textile sector and the Federation of Pakistan Chambers of Commerce and Industry (FPCCI).
Nepra stated that although the average tariff was reduced by Rs0.62 per kilowatt-hour, the benefit was negated by a significant shift in the sales mix. The number of subsidised consumers increased from 9.5 million in FY22 to 20.71 million by June 2025, all consuming less than 200 units per month. These consumers pay heavily subsidised rates ranging between Rs7.74 and Rs13 per unit, compared to a marginal rate of around Rs25 per unit, while tariffs for higher consumption slabs rise gradually to as much as Rs47 per unit, excluding taxes.
The regulator further noted that electricity consumption by subsidised consumers surged from 8.53 billion units in FY21 to 19.7 billion units by June 2025, significantly increasing the subsidy burden. Despite a decline of Rs142 billion in the total revenue requirement of ex-Wapda distribution companies (Discos) for 2026—largely due to a lower power purchase price for CY2026—the government opted to maintain existing consumer-wise tariffs.
Nepra explained that tariff rebasing will now be conducted on a calendar-year basis, starting January 1 instead of the fiscal year, a move aimed at reducing the shock of tariff changes during peak consumption months beginning in July.
Out of the total determined revenue requirement of Rs3.379 trillion for Discos, the government will provide Rs248 billion as budgetary support in the form of subsidies.
Industrialists strongly objected to the decision not to pass on the 62-paisa per unit reduction to industrial consumers, terming it selective, discriminatory, and unjustified. They argued that industries continue to bear a policy-driven cross-subsidy of an estimated Rs5–7 per unit, undermining regional competitiveness.
Rehan Javed, an industrialist from Karachi, said eliminating cross-subsidies could immediately bring electricity tariffs down to 9–10 US cents per unit, revitalising competitiveness and supporting exports. Business leaders also criticised the use of uniform tariffs to mask inefficiencies in distribution companies, warning that instead of addressing systemic losses, costs were being pushed upward onto industrial consumers.
Story by Khaleeq Kiani
