Islamabad, Feb 2: The federal government is set to provide much-needed relief to electricity consumers, with a significant reduction in power tariffs expected in the second quarter of FY 2024-25. Power Distribution Companies (Discos) have proposed a negative adjustment of Rs. 52.123 billion, which translates to a reduction of around Rs. 2 per unit under the Quarterly Tariff Adjustment (QTA) mechanism. If approved, the revised tariffs will be implemented from March 2025, bringing down electricity bills for millions of consumers across Pakistan.
NEPRA’s Public Hearing on Tariff Reduction
The National Electric Power Regulatory Authority (NEPRA) has scheduled a public hearing on February 12, 2025, to evaluate the tariff reduction proposal submitted by the Central Power Purchasing Agency Guaranteed (CPPA-G). The proposed cut is primarily due to:
- A stronger exchange rate of Rs. 278/$ instead of the previously estimated Rs. 300/$.
- A decrease in interest rates, leading to lower financing costs for power companies.
The new tariff structure will replace the current QTA charge of Paisa 19.5 per unit, which expires on February 28, 2025. Consumers will benefit from the reduced rates in March, April, and May 2025.
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Additional Tariff Cut of Rs. 7 Per Unit for Industries
In a major push to support industrial growth, Prime Minister Shehbaz Sharif has directed the Power Division to further reduce electricity rates by Rs. 7 per unit for industrial consumers from April 2025. This decision, combined with the quarterly adjustment, will bring the total tariff reduction to Rs. 9-10 per unit.
Government’s Plan to Cut Power Costs by Rs. 1.14 Trillion
The government has implemented cost-cutting measures to sustain lower electricity rates. These include:
- Termination of Power Purchase Agreements (PPAs) for five Independent Power Producers (IPPs).
- Renegotiation of contracts for eight bagasse-based power plants and 15 other IPPs, leading to annual savings of Rs. 137 billion.
These steps are expected to reduce energy costs by Rs. 1.14 trillion, offering long-term benefits to consumers.
Impact on K-Electric and Lifeline Consumers
NEPRA has confirmed that the third quarterly adjustment of FY25 will also apply to K-Electric consumers. However, lifeline consumers receiving subsidies will not be eligible for the QTA relief.
With these upcoming changes, Pakistan’s power sector is on track for a historic tariff reduction, providing much-needed relief to households and businesses.
