Govt shocks nation with massive power tariff hike

ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) on Saturday received the federal government's nod for a massive hike of up to Rs7.50 per unit in the base tariff of electricity against the national average tariff determination of Rs4.96.

Sources said that the federal cabinet gave the approval via circulation summary after which a request was submitted to the national power regulator.

Federal Secretary on Energy Rashid Mahmood Langrial said that 55% of electricity consumers would not be affected by the increase.

Last week, the regulator hiked the tariff to increase revenue collection for the loss-making power distribution companies (Discos) during the current fiscal year.

The hike is set to come into force from July 1 after formal notification by the Nepra following a public hearing.

The federal government sought approval from the cabinet, adjusting different rates of increases for various consumer categories through cross-subsidy, though without affecting the overall revenue requirement.

According to a Nepra statement, the revised national average tariff for the 2023-24 fiscal year has been determined at Rs29.78 per unit kWh, which is Rs.4.96 per unit higher than the previously determined national average tariff of Rs24.82.

While the regulator cited the rupee’s devaluation, high inflation and interest rates, the addition of new capacities and overall low sales growth as reasons behind the increase, it was actually hiked to meet one of the conditions set by the International Monetary Fund (IMF) of introducing structural reforms in the energy sector.

However, the applicable tariff would be much higher after including surcharges, taxes, duties and levies, besides monthly and quarterly adjustments.