Electricity Bills Set to Drop! NEPRA Cuts Base Tariff

The electricity tariff in Pakistan has been reduced by Rs1.49 per unit for the fiscal year 2025-26, with the National Electric Power Regulatory Authority (NEPRA) setting the new base tariff at Rs34.01 per unit, down from Rs35.50 per unit in FY2024-25.

According to a report published in a national daily, the tariff cut is attributed to several factors, including renegotiated capacity payments with Independent Power Producers (IPPs), falling energy prices, and a projected 2.8% increase in electricity demand during FY2025-26.

NEPRA has approved a total revenue requirement of Rs3.52 trillion for the ex-WAPDA distribution companies (XWDiscos). This includes Rs 3.07 trillion allocated for the Power Purchase Price (PPP) and Rs 454 billion set aside for distribution margins and technical losses.

Last year, the government raised the base electricity tariff by Rs5.72/unit, but this year’s decrease offers relief to both households and industrial consumers struggling with inflationary pressure.

High Costs Persist for Imported Coal Plants Despite Low Capacity

Despite the downward adjustment in the electricity tariff in Pakistan, imported coal-fired plants will operate at just 24% capacity in FY2025-26. However, due to their dollar-linked returns of 27.45%, these plants will still cost Rs61.43/unit, significantly higher than the national average.

Out of the total Rs3.07 trillion Power Purchase Price, Rs1.94 trillion (63%) is allocated to capacity charges, while Rs1.13 trillion will go towards energy and operations & maintenance (O&M). This translates to Rs6,484/month per megawatt of average demand, which stands at 24,943 MW.

The average PPP for XWDiscos before accounting for losses is Rs26.34/unit, with Rs16.67/unit going to capacity charges and Rs9.67/unit to energy costs. When including K-Electric, the national average PPP slightly drops to Rs25.98/unit.

This latest development reflects the government’s efforts to rebalance energy costs through structural reforms and renegotiations, offering a rare reduction in base tariffs that could positively impact economic activities and electricity affordability in the near term.