Power Tariff Relief Delayed Amid Fuel Cost Concerns: NEPRA Warns of Higher Summer Bills

Despite an earlier commitment by Prime Minister Shehbaz Sharif to cut electricity tariffs by Rs1.52 per unit, Pakistani consumers will have to wait until May 2025 for the relief. The delay comes amid rising concerns over fuel costs and increased electricity demand during the summer months.

According to a report by Dawn, the decision was discussed during a public hearing held on Tuesday by the National Electric Power Regulatory Authority (NEPRA), chaired by Waseem Mukhtar. During the session, representatives from the Central Power Purchasing Agency (CPPA) indicated a projected 20% increase in power demand and lower hydropower availability, which could drive monthly fuel cost adjustments (FCA) upward.

NEPRA’s case officer confirmed that a Rs52 billion reduction under the quarterly tariff adjustment (QTA) will translate to a Rs1.52 per unit relief for the months of May, June, and July. However, this relief was not reflected in April electricity bills, many of which had already been issued and could not be revised.

Export sector representatives pushed for the relief to be retroactively applied from April, citing the Prime Minister’s announcement and the basis on which they secured export orders. NEPRA, however, did not commit beyond the May–July timeframe.

NEPRA chairman expressed frustration over the absence of senior officials from the Hyderabad, Multan, and Quetta electric supply companies, denying them the opportunity to present their positions. He also directed a formal complaint to be sent to the Federal Secretary of Energy for failing to attend.

The CPPA reported a 4.4% year-on-year increase in electricity consumption for March 2025. They requested a negative fuel cost adjustment of 3 paisa per unit and confirmed a QTA reduction of Rs1.51 per unit for the third quarter of FY2024-25, citing prior overcharges of Rs51.5 billion.

The lower QTA stems from decreased capacity charges, reduced O&M costs, higher sales volume spreading fixed costs, and better system efficiency. These are influenced by a relatively stable exchange rate and declining interest rates.

Notably, March’s electricity supply relied 75% on domestic fuel sources, with 20% of it incurring zero fuel cost. CPPA’s data shows that 8,409 GWh of electricity was generated at a cost of Rs79.5 billion (Rs9.46/unit), while 8,114 GWh was delivered to DISCOs at Rs74.85 billion (Rs9.22/unit). Since consumers were already billed Rs9.25 per unit as a reference cost, they are now entitled to a refund of 3 paisa per unit.

Hydropower, traditionally the main contributor to the national grid, dropped to 15.42% due to poor hydrological conditions, down from 28% last year. Nuclear energy became the leading contributor with a 26.4% share, followed by RLNG (18.17%), local coal (16.57%), and natural gas (11.64%). Imported coal accounted for 6.5% of the total energy mix.