The Pakistan electricity fixed-charge policy took centre stage on Tuesday as the government acknowledged that the industrial sector has been fully freed from cross-subsidies for the first time. The admission came during a public hearing that also revealed a higher-than-expected financial impact on residential electricity consumers.
The hearing focused on an average reduction of Rs 4.04 per unit in industrial power tariffs, alongside the introduction of fixed charges for domestic users. Representatives from the power division, industrial consumers, and the National Electric Power Regulatory Authority largely supported the move, calling it a long-overdue reform.
Notably, no representative appeared on behalf of more than 28.5 million residential electricity consumers who will now bear the fixed charges. This absence drew attention to the hearing’s uneven representation.
Officials from the power division, led by Additional Secretary Mehfooz Bhatti, clarified that fixed charges would apply per kilowatt of sanctioned load rather than per connection. Naveed Qaiser, Chief Financial Officer of the Power Planning and Management Company, explained that residential consumers would pay between Rs 200 and Rs 675 per kilowatt per month.
This structure means charges apply regardless of actual electricity consumption. For example, a consumer with a sanctioned load of 2kW would pay Rs 400 per month at the lowest rate, while a 5kW connection would incur Rs 2,500 per month. A 6kW load would attract a charge of Rs4,050 at the highest rate.
Pakistan Electricity Fixed Charges Policy and Tariff Impact
Qaiser said the government had introduced a two-part tariff for the first time to recover fixed capacity costs estimated at Rs2.56 trillion annually. While the policy removes about Rs 101 billion in cross-subsidies previously borne by industrial consumers, it raises fixed-charge recovery by Rs 132 billion.
As a result, total fixed charge collection will rise to Rs355 billion, representing around 10 per cent of overall recovery, up from Rs223 billion, or 7 per cent previously. These figures exclude general sales tax and other surcharges.
Officials stated that around Rs31 billion from fixed charges would help reduce variable tariffs for residential consumers using more than 300 units per month. The aim is to discourage high-usage consumers from shifting away from the national grid. The remaining Rs101 billion would be used to ease costs for industrial users.
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Bhatti said the industrial tariff would fall to about 11.50 cents per unit from nearly 13 cents. Although still higher than some regional competitors, the rate now reflects a structure without cross-subsidy.
Separately, financial advisory firm Optimus Capital Management assessed the impact on residential consumers. It is estimated that protected consumers using up to 100 units would see an average tariff increase of 76 per cent, or Rs8 per unit, due to fixed charges. For the 101–200 unit slab, the increase would be around Rs 4 per unit.
For non-protected consumers, Optimus projected a sharper rise. The first 100 units could see an increase of about Rs16.50 per unit, followed by a Rs6 per unit increase for the next 100 units.
Overall, the net average tariff, including fixed charges, is expected to rise across most domestic consumption categories. Increases range from 13 percent for 201–300 units to about 5 percent for usage above 600 units per month. The only reduction, estimated at around 7 percent, applies to time-of-use consumers with sanctioned loads above 5kW.
The policy marks a significant shift in Pakistan’s power tariff structure. While it aims to improve industrial competitiveness, it also places a heavier cost burden on residential consumers.
