In a move that will affect power consumers in Pakistan, the National Electric Power Regulatory Authority (NEPRA) has given the green light to a tariff hike of Rs3.28 per unit as part of the quarterly adjustments.

This decision comes after NEPRA had previously approved an increase in electricity rates, which is expected to place an additional financial burden of Rs135.5 billion on power consumers.

The tariff hike is a result of the ongoing quarterly adjustments in electricity prices, with consumers already paying an extra Rs1.25 per unit due to these adjustments, which were initially anticipated to conclude in September.

Of the total tariff increase, the additional Rs1.25 per unit will persist, while an extra Rs2.03 per unit will be introduced for the next six months.

More related: NEPRA approves electricity rate increase for K-Electric consumers

NEPRA’s decision is based on a positive adjustment of Rs135,584 million, influenced by various factors, including capacity charges, variable O&M, additional recovery on incremental sales, use of system charges, Market Operator Fee, and the FCA impact on T&D losses during the fourth quarter of fiscal year 2022-23.

Originally, the Ministry of Energy had proposed a tariff increase of Rs5.40 per unit, recoverable from consumers over three months. However, in order to mitigate potential political backlash and consumer protests, the Power Division advocated for a more gradual increase of Rs3.55 per unit, to be spread over six months.

Additionally, NEPRA recommended that the government consider maintaining a uniform consumer-end tariff for K-Electric (KE) and state-owned distribution companies, even after privatization, possibly through subsidies. This aligns with NEPRA’s policy guidelines, ensuring consistent tariff policies for a specified duration.

As a result, KE consumers will be billed at a rate of Rs3.2814 per kWh, with recovery scheduled over the same six-month period from October 2023 to March 2024.

It’s important to note that certain industrial consumers will not be subjected to quarterly adjustments, as per a prior decision made by NEPRA.

The impact of the tariff increase will vary for residential and commercial consumers, depending on their usage and load. While the “Life Line” category (up to 50 or 51-100 units) for households remains unaffected, those consuming higher units will experience varying tariff increases. Commercial consumers will also face a uniform rate increase.

NEPRA has forwarded the decision regarding the electricity price hike to the government for notification and publication in the Gazette of Pakistan.

This adjustment falls under the quarterly tariff adjustment (QTA) and is aimed at covering the additional expenses resulting from currency devaluation, interest rate hikes, and related factors.

NEPRA has also recommended that the government explore the possibility of maintaining a uniform consumer-end tariff for KE and state-owned distribution companies, even post-privatization, potentially through direct or indirect subsidies. Consequently, KE consumers will be billed at a rate of Rs3.2814 per kWh, with recovery occurring over the same six-month period from October 2023 to March 2024.