ISLAMABAD: The Power Division has acknowledged that the marginal cost of electricity has risen significantly due to the regional conflict, while subsidised electricity rates offered to a select category of industrial consumers have increased the burden on other consumer groups.
The admission came during a public hearing conducted by the National Electric Power Regulatory Authority (Nepra), where case officers said the average cost of electricity supply had risen to around Rs32 per unit, compared with the Rs22.98 per unit rate offered to eligible industrial consumers under the Incremental Consumption Package introduced on December 10 last year.
The Power Division team, led by Additional Secretary Mehfooz Bhatti and Naveed Qaiser, cautioned that any retrospective adjustment of the package from June 9, as demanded by other industrial consumers, would require legal examination.
The government officials argued that the incremental consumption package had been developed after nearly a year of efforts to address industrial demand and that the regional conflict had subsequently altered the underlying economic conditions.
Nepra Questions Delay in Reviewing Package
The Power Division came under pressure during the hearing as industrial representatives and Nepra members questioned why the government had not sought a review of the package after the completion of its mandatory six-month period.
Industrial representatives Rehan Javed, Amir Shaikh, Arif Bilwani and Tanveer Barry, along with Nepra members Amina Ahmad, Ghulamullah Shaikh and Maqsood Anwar, also questioned why the government had not calculated the latest or average marginal cost of electricity.
Rehan Javed said he had repeatedly raised concerns about the pricing mechanism since February through 48 emails and several representations at monthly public hearings, but claimed that the Power Division and Nepra had failed to address the issue.
According to him, the subsidised industrial rate remained frozen at Rs22.98 per unit, while the average cost had risen to approximately Rs34.26 per unit.
Cross-Subsidy Burden on Other Consumers
The difference between the subsidised rate and the actual cost means that other consumer categories effectively bear a portion of the cost through cross-subsidisation.
Javed estimated that other consumers were paying around Rs11.28 per unit to cover the gap created by the below-cost rate extended to a limited number of industrial consumers.
Industrial representatives Rehan Javed and Amir Shaikh called for the suspension of the Incremental Consumption Package and its related adjustments, with effect from June 9, when they argued that the package had become due for a legal review.
The hearing highlighted growing concerns over the sustainability of the subsidised industrial tariff structure and its impact on electricity pricing for other consumer categories.
