NEPRA Approves Significant Hike in Electricity Base Tariffs up to Rs. 7.50

The National Electric Power Regulatory Authority (Nepra) has confirmed a substantial rise in the base electricity tariffs up to Rs 7.50 per unit.

Commencing July 1, 2023, as indicated in an announcement by the power regulatory authority on Tuesday, these tariffs will take effect.

During a public hearing held on Monday, July 24, at Nepra Tower in Islamabad, the power ministry contended that the “Instant Motion” increase is within Nepra’s established overall revenue requirement. Even with this proposed hike, the government is expected to shoulder an Rs158 billion subsidy, as per the notification.

Federal Cabinet Greenlights Tariff Increase

On the preceding Saturday, the federal cabinet sanctioned a significant increase in the base electricity tariff by up to Rs7.50 per unit, a substantial increase from the Rs4.96 national average tariff set by the power regulator. According to sources from Geo News, the cabinet’s approval came through a circulation summary, and a request was then forwarded to Nepra.

Prime Minister Shehbaz Sharif pledged the day before that lifeline consumers (up to 100 units) and protected category consumers (101-200 units per month) would be exempted from the recent massive increase in electricity tariffs.

Tariff Boost to Offset Distribution Company Losses

This week, Nepra also raised the tariff to augment revenue collection from power distribution companies (Discos), incurring losses during the current fiscal year.

The federal government sought cabinet consent to cross-subsidise different increase rates across various consumer categories without altering the overall revenue requirement.

The revised national average fiscal year 2023-24 tariff stands at Rs29.78 per unit kWh, an increase of Rs4.96 per unit from the previously determined average tariff of Rs24.96 per unit.

Though Nepra attributed the hike to rupee devaluation, high inflation, interest rates, the inclusion of new capacities, and overall low sales growth, the actual implementation serves as a step towards fulfilling one of the International Monetary Fund’s (IMF) prerequisites for instigating structural reforms in the energy sector.

However, once surcharges, taxes, duties, levies, and monthly and quarterly adjustments are included, the final applicable tariff will likely be substantially higher.”