Major increase in electricity rates allowed, reaching Rs. 7.50 per unit
The federal cabinet has granted approval for a significant rise in the base tariff of electricity, with an increase of up to Rs7.50 per unit. This increase exceeds the national average tariff determined by the power regulator, which stands at Rs4.96. The cabinet’s decision was conveyed through a circulation summary, and a formal request has been submitted to the National Electric Power Regulatory Authority (Nepra).
Notably, this increase will not impact approximately 55% of electricity consumers. Rashid Mahmood Langrial, the Federal Secretary of Energy, released this information.
| Consumer categories | Increase |
|---|---|
| Using up to 100 units | Rs3.0 |
| Those using 101-200 units | Rs4.0 |
| Those using 201-300 units | Rs5.0 |
| Those using 301-400 units | Rs6.5 |
| Those using 401-700 units | Rs7.5 |
The power distribution companies (Discos) are facing financial difficulties, so the regulator has decided to raise the tariff in order to generate more revenue. This increase will take effect from July 1st, following the official notification by the Nepra after a public hearing.
To adjust the rates, the federal government sought approval from the cabinet. They made changes for different consumer categories through cross-subsidy, ensuring that the overall revenue requirement is not affected.
The Nepra has announced that the revised national average tariff for the 2023-24 fiscal year will be Rs29.78 per unit kWh. This is an increase of Rs4.96 per unit compared to the previous national average tariff of Rs24.82.
The regulator attributes this increase to factors such as the devaluation of the rupee, high inflation and interest rates, the addition of new capacities, and overall low sales growth. However, it was also influenced by one of the conditions set by the International Monetary Fund (IMF) to introduce structural reforms in the energy sector.
It’s worth noting that the actual tariff paid by consumers will be higher when additional charges such as surcharges, taxes, duties, and levies are included, along with monthly and quarterly adjustments.