New rebased electricity tariff for 2024-25 under IMF directives from July 1

ISLAMABAD: The electric power regulator NEPRA is scheduled to come up on July 1, 2024, with the rebased tariff for the next financial year 2024-25 keeping in view the total revenue requirement for the said fiscal, and more importantly, the circular debt management plan will be carved out in light of the rebased tariff for the new fiscal.

“Every year, the rebasing of the power tariff is determined as per IMF directives and is applied to all categories of consumers, but fluctuations in tariff depend upon the subsidies budgeted by the government for certain categories. This is also the regulatory requirement to determine a new base tariff, which is essential to ensuring on-time recovery of generation costs, system charges, and distribution charges,” a senior official of the energy ministry told The News.

The power regulator, however, has to calculate the new base tariff for FY25 based on assumptions about overall electricity sales growth in 2024-25, US dollar-rupee parity, inflation, interest rates, capacities, and energy purchase price.

The government last time increased the base tariff by Rs4.96 per unit, taking the base tariff to Rs29.78 per unit to achieve the revenue target of 3.281 trillion. In 2022, the PTI government raised the base tariff by Rs7.91 per unit in three phases, due to which the base tariff jumped to Rs24.82 per unit from Rs16.91 per unit.

As of today, the power circular debt stands at Rs2.55 trillion, the capacity payments stand at Rs2.1 trillion, and more importantly, electricity sale growth has reduced, particularly in the industrial sector. The sale of electricity to the industrial sector has gone down by 30 percent and in the months to come, electricity consumption is likely to further tumble to 50 percent mainly because of the higher electricity tariffs.

For the financial year 2023-24, the dollar value was fixed at Rs286, and despite this very fact, the regulator is still increasing the monthly fuel charges just because of system constraints, and the NTDC has to evacuate the costly electricity based on furnace oil and diesel from Punjab instead of the cheaper power from the south.