The National Electric Power Regulatory Authority (Nepra) permitted the federal government to raise electricity rates by Rs3.28 per unit for all national consumers from October 2023 to March 2024. This increase will generate over Rs200bn in additional revenue.
This hike is a part of the quarterly tariff adjustment (QTA) mechanism, which aims to offset additional costs arising from currency devaluation, raised interest rates, and other factors.
Initially, the power division of the energy ministry had proposed a Rs6.20 per unit adjustment for the last quarter of the 2022-23 fiscal year, targeting a Rs146bn finance gap for the distribution companies (Discos). However, due to public dissent over the sudden rise, the adjustment was spread out to Rs3.55 per unit over six months. Additionally, Nepra was asked to standardize rates for K-Electric users to ensure uniformity.
After examining data and holding public hearings, Nepra approved an adjustment of Rs135.584bn for various charges and factors for the fourth quarter of FY 2022-23. Consequently, the revised rate of Rs3.2814 per unit will be applied from October 1, 2023.
Impactions on Consumers and the Energy Sector
Considering an 18% GST, the added burden on Discos’ consumers will be around Rs160bn or Rs3.87 per unit. While the financial implications of the same rate for K-Electric users weren’t publicly revealed, an official hinted it would exceed Rs40bn, pushing the overall impact beyond Rs200bn.
Nepra clarified that specific industrial consumers won’t experience these quarterly adjustments linked to incremental sales.
Moreover, this new QTA charge comes after a significant rise of up to Rs7.5 per unit since July 1, 2023, which had a financial implication of Rs890bn, excluding the 18% GST and monthly fuel price changes.
A key reason for this quarterly increase, as Discos and the power division explained, was that electricity consumption was 13% lower than anticipated by the authorities. For the April-June 2023, they had projected a sale of 37,645 GWh but achieved only 32,661 GWh.
