ISLAMABAD, PAKISTAN — In a significant move aimed at providing relief to power consumers, the federal government has proposed a Rs1.15 per unit reduction in electricity tariffs across most categories, effective from July 1. A petition has been submitted to the National Electric Power Regulatory Authority (Nepra), which has scheduled a public hearing on the matter for the same date.
The proposed reduction would apply to all consumer categories except the first two slabs of lifeline domestic consumers, who are already heavily subsidised. Rates for these segments — up to 50 units and 50–100 units per month — will remain unchanged at Rs3.95 and Rs7.74 per unit, respectively.
According to the Power Division, the proposed tariff structure aligns with the government’s fiscal goals and the National Electricity Policy 2021, which mandates cost recovery through efficient and equitable pricing.
Under the new proposal for FY2025-26, consumers will see tariff reductions ranging from 3% to 10%, depending on their usage category:
- Protected consumers (1–100 units): New rate of Rs10.54 per unit, down from Rs11.69 — a 9.8% reduction.
- Protected consumers (101–200 units): Rs13.01 per unit, reduced from Rs14.16 — an 8% cut.
- Non-protected consumers (first 100 units): Rs23.44, down from Rs23.59 — a nearly 5% drop.
- Commercial, industrial, agricultural, and bulk consumers: A flat Rs1.15 per unit reduction, translating to a 3–4% decrease depending on current rates.
The average consumer tariff is expected to come down to approximately Rs31.60 per unit, compared to the existing Rs32.75.
The proposed rates are based on Nepra’s latest tariff determinations for FY2025-26, the anticipated aggregate power purchase costs, and adjusted subsidy allocations under Pakistan’s agreement with the International Monetary Fund (IMF). Nepra had earlier determined the national average tariff for FY2025-26 at Rs34 per unit, down from Rs35.50 in the previous year.
To meet budgetary targets, the government has slashed overall power subsidies by 12.9%, reducing allocations from Rs1.19 trillion in FY2024-25 to Rs1.04 trillion for the new fiscal year.
Key subsidy adjustments include:
- Inter-Disco Tariff Differential Subsidy (TDS): Reduced to Rs249.14 billion from Rs276 billion.
- Tubewell subsidy in Balochistan: Cut to Rs4 billion from Rs9.5 billion.
- Merged districts of KP and former FATA: Reduced by over 38% to Rs40 billion from Rs65 billion.
- Azad Jammu and Kashmir: Down to Rs74 billion from Rs108 billion — a 31.5% reduction.
- K-Electric: Subsidy lowered by 28% to Rs125 billion from Rs174 billion.
- Tribal areas: Allocation reduced by 39% to Rs40 billion from Rs65 billion.
However, the Pakistan Energy Resolving Fund — designed to ensure timely payments to Chinese investors — has been maintained at Rs48 billion.
Overall, a subsidy of Rs400 billion has been earmarked in the FY2025-26 budget, slightly higher than the Rs394 billion allocated in the outgoing fiscal year.
The Power Division clarified that the uniform tariff structure will remain in place for both state-run and privatised distribution companies (Discos) and K-Electric. The government intends to maintain this consistency through a combination of targeted and cross-subsidies.
To meet the revenue requirement of K-Electric — as determined by Nepra — the uniform variable charge will be adjusted accordingly, ensuring alignment with the federal government’s policy objectives.
Nepra’s public hearing on July 1 will serve as the final step before the new rates are formally notified. The federal cabinet has already reviewed the proposal submitted by the Power Division on June 28.
Officials emphasized that the proposed tariff adjustments are not only aimed at consumer relief but also at ensuring the financial sustainability of the power sector, in line with regulatory guidelines and the broader economic reform agenda.
