Govt approves Rs5.72 hike in basic power tariff to offset sector losses

The federal cabinet has approved a significant increase of Rs5.72 per unit in the basic power tariff through a circular decision. This decision, finalised via a circulation summary, aims to address financial challenges within Pakistan’s power sector.

Sources familiar with the matter confirmed that the proposal will now be forwarded to the National Electric Power Regulatory Authority (NEPRA) for uniform implementation across the board.

According to official sources, the Power Division will formally submit an application to NEPRA to initiate the process of implementing the revised tariff structure.

This adjustment, slated for the fiscal year 2024-2025, is scheduled to come into effect starting July 1, 2024. The approved increase will raise the average basic electricity tariff from Rs29.78 to Rs35.50 per unit.

A recent report from NEPRA revealed that Pakistan’s power sector incurred a staggering Rs403 billion loss during the fiscal year 2022-2023.

The report, which assessed the performance of power distribution companies, including K-Electric, highlighted that nine out of these companies failed to achieve full recovery targets. It attributed the financial strain partly to inefficiencies such as line losses and inadequate revenue collection.

Furthermore, the report underscored that these companies did not fulfill their electricity procurement obligations as per assigned quotas, leading to deliberate load shedding practices. This situation has exacerbated financial losses, amounting to billions in national revenue.