ISLAMABAD [Pakistan], The National Electric Power Regulatory Authority (NEPRA) on Friday announced a substantial increase of about 20 per cent in the uniform national tariff, aimed at securing funding of about PKR 3.8 trillion for 10 ex-Wapda power distribution companies. . Disco) during the financial year 2024-25, Dawn reported.
The new tariff of PKR 5.72 per unit will be effective from July 1. This adjustment is expected to generate additional PKR 485 billion in revenue for the DISCOs, thereby strengthening the government's position in securing the IMF bailout scheduled for July.
NEPRA clarified that the government reserves the right to impose different rates of increase in different consumer categories through cross-subsidy, thereby ensuring that the overall revenue requirements set by the regulator remain unaffected.For the upcoming financial year, the average national base tariff, including K-Electric, has been set at PKR 35.50 per unit (kilowatt-hour or kWh), showing a significant increase from the current PKR 27.78 per unit. According to Dawn, this adjustment is estimated to generate revenues of about PKR 3.763 trillion for the 10 DISCOs in 2024-25, up from PKR 3.28 trillion in the current year.
After including 18 per cent general sales tax, the average base tariff for the next year is expected to rise to PKR 42 per unit, excluding other taxes, duties and surcharges. This adjustment will impose an additional burden of approximately PKR 580 billion on DISCO consumers.
Notably, these figures do not include potential impacts on K-Electric, which is subject to the same base rate despite being separated from Discos.The disparity between tariffs for consumers and the industrial sector was highlighted by the PKR 10.69 per unit cut announced by the Prime Minister, which was aimed at reducing the financial burden on industrial consumers.
This adjustment is estimated to transfer approximately PKR 200 billion in revenue impact to domestic, commercial and wholesale electricity consumers.
After the approval of the Federal Cabinet, the Power Division will submit a tariff table to NEPRA for subsidy allocation across various consumer categories before final notification, in line with the commitments made to the IMF.
In its determination released on Friday, Nepra detailed the calculation of average power purchase price (PPP) across the country as well as the revenue requirements for each distribution company for the next financial year.
As per Nepra's assessment, the estimated PPP for DISCOs in 2024-25, excluding K-Electric, totals PKR 3,277.506 billion.This figure includes PKR 1,161.257 billion for fuel and variable operation and maintenance costs and PKR 2,116.25 billion for capacity charges, service charges and market operator fees.
NEPRA further broke down the components of the PPP, noting that capacity charges constitute about 65 per cent of the total estimated PPP, while energy costs account for the remaining 35 per cent. On a per unit basis, before taking into account the permitted transmission and distribution losses, the capacity charge amounts to PKR 17.66 per unit, with energy charge PKR 9.69 per unit, making the total for 2024-25 PKR 27.35 per unit.
According to Nepra, including losses and distribution margin, the average tariff increases to PKR 35.50 per unit, the increase is mainly due to currency depreciation, inflation, higher interest rates, capacity expansion and sluggish sales growth, Dawn reported. Due to factors like.
An official source said that when additional surcharges, taxes, duties and levies are included with monthly and quarterly adjustments, the actual average national tariff could increase significantly, potentially reaching between PKR 65 and PKR 72 per unit. could reach.This tariff adjustment is important in meeting IMF bailout conditions and pursuing structural reforms, particularly related to the sustainability of the energy sector and the governance of state-owned enterprises.
Last year, similar tariff hikes saw the national uniform electricity tariff increase by an average of PKR 5 per unit, resulting in a fiscal impact of PKR 477 billion and PKR 7.91 per unit in 2022-23, resulting in a loss of PKR 893 billion to consumers. Had to bear the burden. , This increase coincides with a significant decline of 7-13 percent in electricity consumption.
According to Dawn report, despite K-Electric not being directly involved in the tariff-setting process for the discos, its consumers will ultimately face the same base rate due to uniformity in the national tariff policy.
The new tariff of PKR 5.72 per unit will be effective from July 1. This adjustment is expected to generate additional PKR 485 billion in revenue for the DISCOs, thereby strengthening the government's position in securing the IMF bailout scheduled for July.
NEPRA clarified that the government reserves the right to impose different rates of increase in different consumer categories through cross-subsidy, thereby ensuring that the overall revenue requirements set by the regulator remain unaffected.For the upcoming financial year, the average national base tariff, including K-Electric, has been set at PKR 35.50 per unit (kilowatt-hour or kWh), showing a significant increase from the current PKR 27.78 per unit. According to Dawn, this adjustment is estimated to generate revenues of about PKR 3.763 trillion for the 10 DISCOs in 2024-25, up from PKR 3.28 trillion in the current year.
After including 18 per cent general sales tax, the average base tariff for the next year is expected to rise to PKR 42 per unit, excluding other taxes, duties and surcharges. This adjustment will impose an additional burden of approximately PKR 580 billion on DISCO consumers.
Notably, these figures do not include potential impacts on K-Electric, which is subject to the same base rate despite being separated from Discos.The disparity between tariffs for consumers and the industrial sector was highlighted by the PKR 10.69 per unit cut announced by the Prime Minister, which was aimed at reducing the financial burden on industrial consumers.
This adjustment is estimated to transfer approximately PKR 200 billion in revenue impact to domestic, commercial and wholesale electricity consumers.
After the approval of the Federal Cabinet, the Power Division will submit a tariff table to NEPRA for subsidy allocation across various consumer categories before final notification, in line with the commitments made to the IMF.
In its determination released on Friday, Nepra detailed the calculation of average power purchase price (PPP) across the country as well as the revenue requirements for each distribution company for the next financial year.
As per Nepra's assessment, the estimated PPP for DISCOs in 2024-25, excluding K-Electric, totals PKR 3,277.506 billion.This figure includes PKR 1,161.257 billion for fuel and variable operation and maintenance costs and PKR 2,116.25 billion for capacity charges, service charges and market operator fees.
NEPRA further broke down the components of the PPP, noting that capacity charges constitute about 65 per cent of the total estimated PPP, while energy costs account for the remaining 35 per cent. On a per unit basis, before taking into account the permitted transmission and distribution losses, the capacity charge amounts to PKR 17.66 per unit, with energy charge PKR 9.69 per unit, making the total for 2024-25 PKR 27.35 per unit.
According to Nepra, including losses and distribution margin, the average tariff increases to PKR 35.50 per unit, the increase is mainly due to currency depreciation, inflation, higher interest rates, capacity expansion and sluggish sales growth, Dawn reported. Due to factors like.
An official source said that when additional surcharges, taxes, duties and levies are included with monthly and quarterly adjustments, the actual average national tariff could increase significantly, potentially reaching between PKR 65 and PKR 72 per unit. could reach.This tariff adjustment is important in meeting IMF bailout conditions and pursuing structural reforms, particularly related to the sustainability of the energy sector and the governance of state-owned enterprises.
Last year, similar tariff hikes saw the national uniform electricity tariff increase by an average of PKR 5 per unit, resulting in a fiscal impact of PKR 477 billion and PKR 7.91 per unit in 2022-23, resulting in a loss of PKR 893 billion to consumers. Had to bear the burden. , This increase coincides with a significant decline of 7-13 percent in electricity consumption.
According to Dawn report, despite K-Electric not being directly involved in the tariff-setting process for the discos, its consumers will ultimately face the same base rate due to uniformity in the national tariff policy.
